Let’s say I have an idea but it’s a niche, I know it won’t be more than ~1M in yearly revenue at its best. What is interesting for YC and what not when it comes to potential size?
However, your question is trickier than it seems because so many major startups begin as 'toy' or 'niche': https://paulgraham.com/altair.html. If you make something people want, there are often ways for it to grow—and perhaps grow big—that aren't obvious at first. The Airbnb founders stuck for a long time with their 'airbed' idea before making the obvious-in-retrospect (but not at the time) leap to a much larger market.