Base station has no space requirements, the more space you have - the more room space to play you will have. Base station can track up to 5m. If your controllers shake a little - its ok, but if they lose the traction and start jumping in various places — its a bad thing caused by something that no one really knows, because nolo support dont give a shit about that problem.
There are many things that could affect tracking as i know:
1 reflecting objects (confirmed only for mirrors)
2 various devices (confirmed issue, a guy recorded a video showing glitching controllers while TV was on and resolving this with turning TV off. At the ceiling a have wires from not connected )
3 some unidentified objects in the room (my issue, in the middle of the room my controllers are loosing tracking, especially when pointing to the ceiling. On the ceiling i have smoke detector, wires and couple holes, something from that causing really hard problems making nolo not usable in that area)