From my experience, and the 17 different threads on military training i have read, i am so far concluding the following:
- At zero skill level, squads of 2 to encourage sparring is ideal, as sparring gives much more xp than demonstrations at low skill levels.
- However, at a certain level of skills - specifically Teaching, and to a lesser extent Student, Concentration, and the relevant skills being taught - demonstrations actually (finally) start to be more beneficial than sparring. That said, the actual benefit depends on many factors, such as the number of "students" in the squad, the training regiment they are following, what military skills they have already (a green soldier with novice biting will mean that everyone will learn biting, which results in less of the more important skills) and even including things like how often they have to change their equipment or eat/drink/sleep - demonstrations take longer to organise than sparring, and time spent waiting for a straggling squad member is time that could be better spent sparring.
For example, 4 green soldiers are best off in 2 squads of 2. If you have 1 experienced teacher (say level 5-10) who is decent (level 3) with the weapon skill being taught, and 3 green soldiers, you're probably still better off with 2 squads of 2 (perhaps rotate the greens so they get equal time with the "teacher" if you want to keep their skill levels similar). However, if you have 1 legendary soldier, say level 10 teaching, 5+ student/concentration and level 15 weapon skill, and you put him in charge of a squad of 3 green soldiers,
and set the squad to train with a minimum of 4 members year-round, and only sleep when in need (instead of at will), the overall skill level of that squad will rise faster than if the squad was divided into 2 squads of 2.
This is just an extreme example. There are so many factors that it's hard to tell where the exact cutoff point might be for ideal squad size, but generally speaking, my approach is: Squads of 2 until you have very good teachers (embarking with teachers is recommended), and then probably squads of 3-6 after that, making sure your squad is training 24/7/365 and stuffing as much into their backpack as possible to minimise breaks, and manually allocating times to change uniform (ie. not using equipment in a uniform until you have enough for every squad member to have the item, then giving them a station order to your equipment barracks, and not making any more of that item so they aren't running off to replace old pieces with new, better pieces).
One advantage of such a rigorous training regiment is that since your squad is always active and always correctly equipped, when you tell all 6 of them to station at the front gate, all 6 of them will be there within moments
Edit: lots of edits.