How to choose the right wall plug size?
You need to make the hole the "right" size - neither too big nor too small.

You should choose the size (diameter and length) of screw based on the job you are doing. You should then choose the size of wall plug based on this.

The internal diameter of the wall plug is determined by the size(s) of screw it is designed to take. The external diameter of the wall plus is determined, in part, by the load it's designed to take. A "heavy duty" plug will be bigger than a "light duty" one.

You should then choose the drill bit required to fit the plug snugly. This should be printed somewhere on the packaging. You might find you need to go one drill size larger if you are using the maximum size (diameter) screw recommended for the plug.