The complete size of panel has to be kept small while break-routing and many PCBs shouldn’t be placed in one panel.
Material wasted by cutting off increases significantly if too many small sized PCBs are in a single panel. This also reduces the strength of your PCB. If the panel size is increased in break-routing while putting in small PCB designs, it’ll bend from the center when kept horizontally.
If the design can’t be changed, additional material is to be added within PCBs for strength reliability.
Now let’s suppose we have a cutting tool which is 2mm wide which obviously needs a bigger clearance than its width for stability. In similar fashion, tolerance of 5mm isn’t stable because 2mm * 2mm clearance cut away will just leave 1mm which makes it more unstable.
Two small sized break-routed PCBs should be cleared from each other by a minimum of 10mm.
For a stronger panel, choose a wider one.
Break-outs tabs should be placed horizontally and vertically when break-routing is utilized. These tabs are hard to be defined or not possible at all for small PCBs since a minimum 5mm of accessible length is required to avoid improper placement.
Using V-cut method for board separation is often the most optimized and mechanically stable answer for panelizing small sized PCBs.