In your standard "stock" tank plant growth is limited by two factors: light and carbon.
Once you remove the light limitation then growth becomes carbon limited. The plants want to grow faster, but cannot fix carbon rapidly enough. They are able to convert bicarbonate to useable carbon (a process called decarboxylation), to varying degrees depending on species, but the enzyme required to do so (Rubisco) is the slowest enzyme known, so decarboxylation is not the favoured pathway for carbon uptake. There's more to it than that, such as enzyme saturation to speed the process and a few other tricks that plants imply to get around the slowness of Rubisco, but the bottom line is that when ample light is supplied, growth becomes carbon limited, so CO2 is supplied to prevent that.
As for the wpg threshold, that's a little more hand-wavey, and very subjective. I would put the boundary around 2-2.5wpg. Watts per gallon is a "rule of thumb" based on the light output by a T12 NO fluorecent bulb and comparing it with the amount of light required to saturate photosynthesis. This, of course, has nothing to do with watts really, which is simply the amount of electrical power required to run the bulb, not the amount of light produced. Power compacts (PC) produce more light per watt, plus if you get the AH Miro reflector you're further inreaing the amount of light in the tank. So the type of bulb, or lighting system, becomes important.
Tank size is also a factor, as you amy guess. Since we're talking about the amount of light required to saturate photosynthesis our concern becomes an issue of amount of light per unit area (and there's a factor of scatter in there as well based on tank depth). However, after you get much bigger than a 75 gallon tank, surface area isn't increasing that much compared with the amount of light you are pumping into it, so the wpg rule of thumb breaks down in larger tanks. In tanks smaller than about 15 gallons the number of watts of light needs to be much higher to achieve photosynthetic saturation than would be required on a larger tank. So treat watts per gallon more as a very vague ballpark figure and work from there.
