Hi Jim,
The larger the nozzle and needle allows more material to pass though the gun - this requires the larger cap which supplies more air to properly atomize the paint, giving you a potentially wider pattern. The trick is to balance the quality of the atomization against the width of the spray pattern. Both must be correct to keep the frustration level to a minimum, that applies to all spray equipment.
Generally speaking, the smaller setups are used for topcoats and the larger for undercoats. That relates to the sprayable viscosity of the material - color is thinner and undercoats are heavier. Both have different requirements going through the gun to give you the nicest finish posible. Other factors such as how you spray, your compressed air supply and the exact material you are working with come into play, so expect to experiment a little bit to find what works best for you.
Good luck and have fun,
Dan
www.gocolours.com