According to Powermate, tank sizes are measured in gallons. In general if you will be using air tools that require continuous air, such as a die grinder, then you should consider a larger tank. If your air tool requires short, intermittent bursts of air (nailer/stapler) then a smaller tank size can be used.
Die Grinder requires 8 CFM @ 90 PSI.
Compressors will have a deliverable CFM at a specific PSI rating. These ratings are based on the engine/motor horsepower, pump capacity and tank size.
Air compressors work primarily from air stored in the storage tank. As a result, the amount/volume of compressed air a compressor will hold impacts how well certain tools will work.
Additionally once the tank is filled, a larger tank compressor will not have to run as much to maintain the CFM's provided the compressor pump can produce more CFM's than you are using.
Learn how to choose an air compressor at The Family Handyman.
Get some tips on buying an air compressor at Overstock.com.