^ This. It makes you play more patient and cautious too, since one mistake could mean the end of your life bar. It actually teaches you to play tactically and with second thought. Playing with HP on small/smallest makes me appreciate every tiny health point that I have even more.
I like the fights to last as long as possible so I do largest health bars. Hate rounds only lasting like 10 seconds with the smallest settings. I'm here to fight, not spend more time in menus than in a match!
There's two ends to the coin, I find that playing on SMALLEST health teaches you to play properly and carefully, however it is harder for a less skilled player to beat a higher skilled player on NORMAL health compared to the smaller health bars.
That's true. SMALLEST is an outstanding way to learn to play carefully and with caution. But the downside is that it narrows the skill gap between experienced players and novice players, since playing on SMALLEST makes everything more luck-reliant.
The thing about LARGEST health is that - compared to NORMAL health - it makes the skill gap more visible between players. There's a downside to that too, since it can demotivate the players with lesser skill. That, and the matches seem to last forever on LARGEST.