Though your computer will allow you to freely resize a design to virtually any dimension, that doesn't mean you can actually embroider it. The problem is, you're dealing with physical stitches, not graphical elements.
In the case of reducing a large design, you start merging together stitches as it gets smaller resulting in a loss of visual detail, thread breaks and needle breaks. Also, many of your fill areas need to be changed to satins.
When enlarging a design, you start to gain large open areas with very little detail. In addition, satins become wider, possibly too wide to sew properly. Some of them will need to be changed to fills.
A Digitizer always takes into consideration the sewing size of the design when punching it. A fish that goes on a jacket-back has much more detail than one that goes on a hat. In fact, most Digitizers would re-punch the design from scratch when making a radical change in size, rather than just trying to edit the design to fit.
Another angle to consider in the resizing game is what type of file you are dealing with, outline or stitch? A stitch file (such as .exp, .dst, .psf, etc.) already has the physical stitches locked into place. Resizing does not add or remove stitches which means the existing ones are either pushed together or pulled apart. The golden rule here is no more than 10% resizing.
An outline file (such as .pxf, .pof, & .cnd) does not have the physical stitches locked into place. When resizing this type of file, the density will change in proportion to the amount of resizing. But you still have the problems of stitch types needing to be converted, and details not being consistent with the design size. With this type of file, no more than 20% scaling should be attempted. However, depending on the characteristics of the design, you may find that you can resize to a moderately higher percentage than 20%. Don't be afraid to experiment, but also don't assume that what works for one design will work for all designs.
If you stick with these parameters, then you should be able to maintain your stitch quality while resizing. Anything more is questionable