Where display space is an issue, the 2x3' size may be the answer! Indoors, they take up less wall space. Outdoors, they may be less likely to be snagged on nearby shrubs and such. For carrying in a parade, the 2x3' may create the desired impact and be much easier to carry.
No nations' flags should ever be flown under another nation's, but if a State flag were to be flown under the US flag, a smaller size is appropriate.