This is a very interesting and very important question!
Sometimes the right answer is that an XML document should be “all the information about one business object” (for example, a product or a customer).
But sometimes that gives you documents that are too big for comfort, or too small for comfort. Managing extremely large documents demands a lot of memory, and exchanging lots of small documents can lead to an increase in message traffic. A “comfortable” size from this point of view is, I would say, 5Kb - 50Kb.
If there is a unit of information that you will usually want to put on the user’s screen in one go, then that is probably your ideal document.
These are just some ideas. As often with database design, there is a need to balance what is convenient from the point of view of the application developer with what is most efficient in the database. The only firm Tamino rule is to avoid really large documents if you can.
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