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The monsters are weighted by size. As we take hits, I notice that my "size numbers" reduce. The monsters always stay constant. If my injuries take me down from size 195 to size 77 while battling a size 85 monster. Are my chances of winning lessened as I drop under his size?
Size and level has no a direct influence on he combat beyond a certain skills. What your level determines is how many stat points you got to distribute them among your stats. Same for monsters. The higher their levels, the bigger is the amount of points distributed among their stats.
Your chance of winning depends only on how you built your character and what monster you face as not all monsters distributed their stats in the same way, and not all of them has the same skills (not active yet).
Also, your size is being reduced when you get enough damage to lose a squad member, so you lose him or her addition to your squad stats.