In our time renovating North suburban homes, we've met numerous people who have a firm opinion about the importance of a large backyard. Some are city-dwellers who express one or more reasons in favor of green monsters:
it should be big enough for children to enjoy
this is why we moved to the suburbs ("Remember our old 4x8 concrete balcony, honey?")
I need space to [garden], [throw a football], [let the dog run], or [install a pool], etc.
I love to water, fertilize, and mow the lawn in my spare time
You caught us. We made the last one up. At roughly 9,000 square feet or bigger, the lot size seems to cross a threshold at which few yard-size concerns are voiced. Maybe it is a coincidence that we noticed in our admittedly unscientific study, and of course some people like to talk about their "back forty." But we do want point out that large yards come at a cost. First, rising land values in the North suburbs of Chicago are reflected in the purchase price of the property, and the land value includes yards of greenery that cannot be developed without approval from a zoning board. The land also factors into real estate taxes, a recurring expense that partly measures how much we value undeveloped square feet. Finally, we have the ongoing maintenance cost--primarily measured in time behind a lawn mower and/or paying others to perform landscaping services.
Builders adore large lots for new construction so that they can rationalize the cost of construction over many square feet of living space. Older homes with expansive green space are invariably marketed to buyers so that exterior pictures ooze with "suburban charm" regardless of the dilapidated state of the interior that need significant renovation work. Zoning rules that govern the ratio of living space to lot size were adopted for conformity purposes--to bring the footprint of the home in line with community expectations--but they also guarantee a minimum yard size. Whether your yard is "enough" for your purposes is your decision is one sense, but also a byproduct of factors and legacy decisions that existed before you even considered buying house A or B.
To complicate matters, we are making a decision to purchase a house today while we don't often do a good job calculating expenses and uses in the future. Is the cost of a big yard today roughly equivalent to, or less than, the expected joy it will bring us next year? In five years? Ten? Young children will happily play in 200 square feet of grass, but older children prefer other outdoor activities such as going to the park, the beach, the public pool, riding bikes, or hanging out with friends (i.e. any place other than in their own backyard with parents around). Children change, but the size of the yard is fixed.
If this sounds like an argument for urban density in a suburban environment, it isn't. Our point is that the size of the backyard that is right for you now and in the future might not be the same thing; the various costs (financial and otherwise) associated with the yard size should be accounted for as closely as they are for the dwelling space when comparing two or more properties; and proximity to parks, beaches, and other public spaces is worth considering to help offset limitations inherent in the fixed square feet of your property.