When or whether to use them is ultimately an esthetic decision. The argument 800 here follows the usual TeX convention for scale factors that 1000 means normal size.
Magnification takes place in all directions.
The diagram can of course be made larger, in case a use for this is ever found. Occasionally, a diagram comes out ill-proportioned, most often too tall. The first example is normal size. Again, only the node spacing is affected, not the nodes or labels themselves. See how the slope of the diagonal arrow changes.