The effect of changing the stereo base are summarized in this statement: Increasing the stereo base increases the deviations, pulls the scene closer to the observer and makes the objects within the scene appear smaller. Reducing the stereo base decreases the deviations, pushes the scene away from the observer and makes the objects appear larger.
The effect on the deviations is pretty clear from the fundamental stereoscopic deviation: p = FB/I, but how increasing B makes the scene come closer or appear smaller? The figures on the left might will help clarify this.
Why Appear Closer?
Consider the series of pictures of the 3 bowling pins, taken with different stereo bases. These pictures are shown here exactly as recorded (with a slide bar) with no attempt to adjust the stereo window. It is clear that the image is shifting towards the inner edge of the frame with increasing base. From our discussion of the stereo window we know that when the film chips are pushed closer, the scene appears to be moving towards the observer. Stereoscopic viewing of the bowling pin pictures confirms that this is indeed the case. Increasing the stereo base does make the scene appear closer to the observer.
Why Appear Smaller?
This is a direct consequence of the previous effect. The actual size of the objects does not change but when the stereo base increases they appear to be closer, so our brain concludes that they must be smaller.
This is a little more subtle to observe and is more pronounced in stereo projection than freeviewing on this page. But let's try it: Consider the series of letters in the stereogram here. All letters have the same size. The relative shift of the letters (artificial deviation) makes the ones in the center (“Smaller”) appear closer to the observer. Hence they look smaller. The ones in the back (“Larger”) appear the furthest from the observer hence they look larger. It might take a little while for this to be clearly seen. Stereoscopic viewing is absolutely essential to experience this. If instead of parallel, you use cross-freeviewing then the opposite effect will be perceived, i.e. the “Larger” will be forward and smaller and the “Smaller” will be pushed the back and appear larger.