I've made a number of quilt tops and a few backings now and it seems like a 4 inch margin on each side would be a lot of waste.

How small a margin can you really get away with to quilt it without trouble?

about 3-4" depending on how much quilting needs to be done!
THEN when trimmed, I still have usable strips!

It depends on whether you're going to quilt it yourself or send it out to someone else. I know that long arm quilters usually have a certain number of inches that they want around all sides. I quilt all of my stuff myself and on smaller items, I usually only go 1-2 inches around the sides, but I also make sure to baste well, so the fabric doesn't move on me. There are several factors to consider when looking at the backing.

Most quilters require that.

Better to have the backing too large and need to be trimmed than to have it too small. The backing 'shrinks' up when quilted. Very difficult to work the binding when the backing ends up not going to the edge.

The leftover backing becomes stash and gets used in future blocks. Stash is good. :)

if you are sending to a long armer you need more 4 to 6 that is because when we mount them on the leaders and such we need some play I have had a couple come to me with backing that was too short - it will get sent back but we need more play room than someone quilting on domestic - lots of people trim the excess backing and use it to bind the quilts which really means you are not wasting the fabric -

I like the idea of making the excess big enough to use the extra as binding!

We require 2 inches ALL the way around for backings

it depends on how the quilt is to be quilted/and by who-
if sending to a long armer they have their own specifications- i generally ask for 5" all the way around-
the backing/batting is trimmed even after quilting- and no reason to think of it as waste- it is very usable fabric that you are cutting off- putting back in your stash for another project.
without excess all the way around you can wind up having to cut your top after quilting-
it is needed to attach to the frame- and to compensate if everything is not quite perfectly square-
as you quilt the fabric is drawn up (like it is when doing applique and embroidery- that's why those squares are always larger- then trimmed to size after the applique/embroidery is finished-
the more quilting the more the fabric will draw up- meaning the more backing/batting is required to have enough for the top-
it is very (traumatic) to be quilting a quilt and get to the bottom and find you are 2" short---find you've run out of backing with 2" of top left to quilt---better to have excess to trim than be short!
and the more you have all the way around the larger your pieces left over will be- 1" might not be that usable- 4" lots can be done with...
but every quilter is different- and requires different amounts to 'make sure' there will be enough

i leave enough to allow me to attach the quilt to the frame and quilt the edges. I found myself short one time by a couple of inches and had to piece the back w/ a sliver of backing.

I tell everyone it had character and "a story" to tell....Won't do that again!