My guess is this game is fun and safe/stable for any nation currently around medium size. Any thing small or smaller is not as fun (although small is still probably fun) and rapidly shrinking more and more towards the not-so-fun zone.
The other thing that may end up or may already be a concern is what went on in the USA in Hattrick. It was a fairly large, fairly static country and the way it ended up working out frequently was new users going in to the bottom level (VI mostly), going 14-0-0 with huge goal differentials because they played bots, and then would go up and get plastered in V. For many teams the cycle of alternating great seasons with beatdown seasons lasted for as many as three or four promotion cycles before they finally got up consistently - and then the margin between V, IV and III often was much narrower.
I haven't seen many complaints on that here, but I could definitely see something similar happening in between, say, small and medium, where DII would be filled and there are relatively small but significant number of teams in III. But I think the league filling algorithm here is different so the teams here would at least likely be consolidated into fewer leagues upon demotion.