How far can we realistically push small models locally?

I have been experimenting with smaller open-weight models lately, and I keep wondering where the practical limit is.

With models getting better at tool calling, reasoning and agentic workflows, is it still worth running a larger model locally, or are smaller 2B–7B models becoming good enough for most personal workflows?

For people actually running models locally:

What model are you using?

What hardware are you running it on?

What task surprised you with how well a small model performed?

Would love to see some real-world setups rather than benchmark numbers.

I added a screenshot of one of the setups I was looking at here: