I have been engaging in a protracted discussion of a very related issue in another thread in this forum and thus have recently put quite a bit of thought into such matters.
See,
http://www.reefcentral.com/forums/showthread.php?t=1932521&page=8
There are those who contend that discussions of appropriate tank size make no sense because this is a purely subjective issue incapeable of objective parameters based on substantial experience and reasonable consensus. Such folks argue that we can never replicate the open conditions of nature and therefore placing fish in a home aquarium is always inappropriately small and therefore not subject to minimum size requirements. These people also assert that everyone will never ever agree as to what size system is appropriate for a given species, and there will always be substantial differences of opinion, thereby making such determinations useless.
These postions are unjustified. As I often like to say, you may not get all people to agree with what is the appropriate size tank for a given species, but you can usually get virtually all of them to agree with what clearly is not. Determining what is an appropriate tank size for a species is not difficult or beyond determination. It has nothing to do with fish "happyness", "morality", nor how closely the system replicates natural conditions. It is has to all to with a singular result of inappropriate tank size --fish stress. A fish who is very stressed will engage in varying degrees (depending on the species) of abnormal behavior and/or suffer negative physical effects which can manefest themselves in a number of ways, including, without limitation, aggression, excessive hiding, excessive pacing, greatly impaired immune response and susceptability to disease, reduced feeding, faded color, and stunted size. Based on the reports from many hobbyists who have kept certain fish for years, we are able to determine which tank sizes are apprppriately sized for a given species, which is very simply those sized tanks which do not cause severe stress and these manefested symptoms.
Different groups of fish tolerate such stress to varying degrees. For example, as the link to the below article explains, large angels cannot tolerate this stress well and often succumb to disease when forced to endure it. The same can be largely said of tangs based on everything that I have read, although not to perhaps as severe of a degree. Physically, tangs have a real disadvantage which may explain, in part, why they are so susceptable to disease and parasites. Tangs have a very thin to non-existent slime coat. Slime coats are very important in assisting fish to resist parasites and disease. Severe stress combined with the lack of protection from a slime coat is a recipe for tangs becoming sick.
In summary, a tank is too small for a given species if it causes severe stress which manefests itself in one of the ways described above. Some fish, like triggers and groupers, can tolerate such stress better than others; while large angels and tangs often succumb to disease when exposed to such stress. Therefore, you cannot severely undersize the system or overcrowd it when keeping these fish. At bare minimum. most fish also probably live greatly shortened life expectancies when forced to live with such stress just as people do when forced to live in difficult environmental conditions. Read the below article which willl help you understand why you cannot keep certakin fish in too small of a system. Undersizing a tank for a given species is not a moral issue. It is a health issue.
http://www.advancedaquarist.com/2008/1/fish