It is very important when designing a sign that you choose the appropriate size and type of font. The further the distance you want people to be able to see the sign from the larger the font should be. You also want to choose a font that will be easily readable from a distance. For example cursive fonts will blend together and may be difficult to read.
You may also find that as the font size increases you may need to make the sign itself larger to accommodate all of the information. However, if the sign doesn't have a lot of information you may be able to use a smaller sign and still maintain the appropriate size font.
It is also important to recognize that depending on the type of sign your town, county ect. may require the letters to be a certain height to be legally binding. For example some states require the letters on posted signs to be of a certain size. If you have a concern about this you may want to contact your local government to find out if there are any font size requirements.