The earth is small. If you build a scale model of the solar system the size of a football field, with the sun and one end and Neptune at the other (Pluto has been laid off as a planet) then the sun will be about the size of a ping pong ball and the earth will be the size of a poppy seed (and it will be about ten feet from the sun). Jupiter is about the size of a pea at this scale. Alpha Centauri is about four miles away.
And not only do you live on a poppy seed, you live on a very thin layer on the surface of this poppy seed. Blow the poppy seed up to the size of a basketball and the habitable layer is about the thickness of a sheet of paper.
"The Integral Trees" by Larry Niven is a novel in which people live in a free-floating cloud of atmospheric gas that is gravitationally stable in a multi-star system. They live on enormous trees with canopies on each end, which are blown in opposite directions by the winds (so they look like the integral sign).
That really depends on your quality metric. If you care about computational speed (because there's only a finite amount of time before the heat death of the universe) then the speed of light starts to be a limiting factor, and concentrating all the computation in a small space makes sense.
To the goal of sustaining intelligent life. I'm being semi-facetious of course, but scifi authors and futurists have discussed dismantling the planets to build more mass-efficient structures for a long time.
