I have my M40's set to "Large" or "Small", depending on what I'm listening to at the time.
When I listen to music, I don't like to use my subwoofer since it gets a little "boomy" at times, so I run the 40's full-range. When I first tried this out I kept switching between "Small" w/sub and "Large" w/o sub, and decided that to ME it sounded better without the subwoofer. Maybe it's 'cause I have a low-budget sub.
But when I watch DVD's, I set the 40's to "Small" 80Hz. Again, I experimented and chose what sounded best to ME.
Bottom line is I don't think there are any hard and fast rules on speaker settings. Tinker with your stuff and find out what sounds best to you.