In DCS, I don't think target size does anything to the missiles.
Its not like it would matter anyway, because any shot outside 8 miles will probably go the way of the AIM-7D! :P
Well, unless you're mach 2 and 50,000ft...Then, well...Fox 3 long! :D
Bombers and transports are large.
Fighters are medium.
Small is *probably* missiles and helicopters, I haven't tested that yet.
I don't think this affects fuze settings in-game, maybe it would in the real jet, I don't know.