Shorter line, not necessarily smaller circle. I also work on the principle that the horse has to earn the longer line, but I also teach “out” very early so that I can walk with them at a distance and do straight lines, larger circles, and cloverleaf on the short line.
As the longer line is earned, I will take it away again as necessary. Reeling them in as soon as they’re ignoring my down transition cues, and then sending them back out to the longer line again as soon as they’re paying attention again. I’ve had sessions that looked a bit like I was playing yoyo with the horse!