Backing plate should cover to the edge of the Velcro on the foam pad.
Too small and the energy is focused in the center of the pad and the edges don't cut.
Too big and the BP cuts into the back of the foam pad
Way too big and the BP sticks out past the pad where it can damage paint, emblems etc.
Be aware that different BP's may have different hook and loop systems.
I know you are asking about foam, but for example with a Meguiar's Microfiber pad, they suggest that not using the Megs BP can lead to overheating and premature pad and BP failure.