Some sponges contain some nasty toxins that can wreak havoc on a system. Benthic type sponges (fuge, low flow areas, low light areas) generally begin growing when the conditions get right. I've never had any negative effects from die off (when/if they die off, it is usually a slow process, unlike 'purchased' sponges, which can go from nice looking to dead in hours, adding a lot of pollution in one swoop). Many a coral has died from sponges living internal to rocks dying off during shipment. That is one of the bigger issues with freshly shipped live rock, too.
Some sponges tolerate light better than others. I've got a bright blue Haliclona sp. sponge that I've been growing for two and a half years from a fingernail sized piece. I've cut some larger pieces (2 or 3 that were ~1" or so long) as well as a number of fingernail sized pieces and all have continued to do well. They wax and wane in growth spurts (been waning for about 6 or 9 months now, but starting to show signs of growth again). They don't seem to like tons of light, but from a recent dive trip to Acapulco, one dive was almost entirely blue Haliclona, so I got to see them in nature. They were in about 30 to 40 feet of high turbidity water. Current was very mild, I'd say (not much where we were). That tells me that particular species will do best in subdued lighting (not shaded, but not direct) and med flow with lots of detritus.
I've got a purple one that looks a little like Haliclona, but not sure. It is much more sensitive. I fragged some of the blue Haliclona out of water and didn't lose any of it. The trick is to swish as much air out of the sponge when it goes back into the water (violently swishing). I only had the purple out for a short period of time to break the rock up to put frags in different locations, and nearly every bit of it died back to just a small amount in the crevices of each fragment of rock. It all grew back, but then I moved some of it once to a different spot and it did the same (but still grew back). It seems to be less light tolerant as well (though it doesn't die as quickly as non light tolerant sponges).
I've also tried the tree sponges (a red and an orange) and haven't had luck. After my red died way back, I moved the remnants to the back of the tank, under some rock and it is still as large as it was when I put it there eight months ago. I was told by the guy who gave me the blue Haliclona frag that he cuts up colonies if he gets them as soon as he gets them and has higher survival rates. Not sure if the relocation, resizing, or just dumb luck has kept the piees of red tree alive...
They seem to be highly variable in handling tolerance, light tolerance, and flow tolerance. Some may do okay where others in the same conditions may not.