When you hang that 10 foot(ish) hammock, it will likely cover 9 foot or less horizontal distance because of the sag you will hang it with. How long and wide and even the shape of a tarp you will want will depend on several factors... if you want wind protection, how much rain coverage you want, how much head room you want, and maybe even how much privacy you want.
And it isn't all black and white, there is a lot of gray area in this. While bigger would seem to make everything better, it doesn't. As you have surmised with the 'circus tent' comment, big tarps weigh more, are more complex to setup, and can put restrictions on site selection. And if you are only concerned with rain, small doesn't make everything better either. There is blowing rain, being able to keep gear dry, and being able to move around outside your hammock to deal with cooking, dressing, etc. Long periods of rain can be depressing, especially if you are confined to the hunker down mode.
At some point, once you figure out the environment you are going to be in with the chances of rain, how long it rains, etc, it comes down to personal preferences in what you think you will be comfortable with and how much coverage you want. Then the details of shape and design come into play and you can pick what you want.
Youngblood AT2000
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