1. 2 inches in one dimension is my size cut-off
2, sort by color in gallon ziplocks. All my ziplocks must fit in one bin -- if they don't fit, the use it or lose it rule applies.
3. I make all kinds of scrappy projects, from full sized quilts to pin cushions, pillows, wallhangings, sachets,
4. too small to keep goes in trash or recycling. Our area now has a separate fiber recycling category where you can put any textiles, clothing, pillows, etc.
Scraps are wonderful, but only if you do use them. Otherwise it becomes hoarding of trash.