you get to decide! I know scraps smaller than 1 inch square are too small for me! Using a regular 1/4 inch seam on a square that size would leave you with a half inch square finished square I also would not keep strings less than 3/4 inch wide as that would leave me with a 1/4 inch finished string. But if you are doing raw edge applique, you could go smaller, or even smaller with something you are going to throw on another piece of fabric and stitch densely over to make your own background textured fabric. I generally call anything smaller than a fat quarter a scrap