I've played the game in a few different map sizes. I've found that the huge galaxy seems to be the best fit when playing all 8 factions. Plenty of room to explore for a while, but it doesn't take that long to encounter and deal with several factions. It seems the right balance.
By contrast, when I try 8 factions on a gigantic galaxy, I find that there's very little interaction with other factions for quite some time. In one game, I'm about a third the way through the Age of War by the time I share a border with another faction and that another is trading with me. Another faction declared war on me, but but my scouts haven't even reached their borders yet and I doubt I'll even be attacked any time soon since they're so far away.
Has anyone found an optimal number of factions, depending on galaxy size? I'd eventually like to add custom factions in the larger maps to enhance the gameplay.