How come THM (through hole mounting) 1/2 W resistors are bigger than their 1/4 W or 1/8 W counterparts, while SMD 1206 1/2 W and 1/8 W resistors are equally sized?
It's simple, the through hole resistors have the leads connected to the board, the smd resistors have pads which are directly in contact with the body of the resistor and the body itself is pretty much in contact with the board. That allows them to dissipate heat by transmission way more efficiently, plus when they are black they also dissipate by radiation fairly good, due to the smaller surface area and the fact that they are directly over the board they dissipate a little less by convection
now the transmission depends on the material of the body too, so if it's made lets say of aluminum it will be able to handle more heat than one made of ceramic, also if the film that actually makes the resistor can handle higher temperatures the heat dissipation capacity will be also bigger, as le_top said though it will depend on the layout too, its not the same to have a trace 1mm wide connected on each side than a 0.1mm one
in a through hole you mostly dissipate by convection, meaning that you must increase the surface area
SMD 1206 defines the flat/projected size of the component / in other words, it defines the footprint. But they do have differences when their wattage is different.
How much heat the component can handle not only depends on size, it also depends on other factors: component matérials used, board layout, ... .
I could find SMD 1206 resistors that can handle 2W. The manufacturer indicates that the actual power depends on how the device is actually mounted. The 2W device has an aluminium core which helps conducting the heat to the board and possibly a heat sink. The SMD resistor is directly on the PCB so it is "easier" to transfer heat from the resistor to the PCB than it is for the THT resistor. In addition, the PCB layout can be designed to improve heat dissipation.
There is of course also the issue of pricing - when you are using THT you typically care less about space occupation, and increasing the size of the THT resistor to cope with double the power, is a relatively small increase in the 2D space taken on the board. (The axial resistor is cooled by the air flow, unless you put a heatsink on it using a clamp for instance).
The power rating is a combination of higher tolerance , lower tempco and higher max operating temp. Thus these variables define the Pmax. I found that% tolerance is the biggest factor due to max temp R error. The exceptions increase cost dramatically for high temp, low tolerance error, low temp. coefficient. They are not all the same.
So you may find 1/8W 0.1% to 1/4 1/3 to 1/2W 1% and many options in between with 1/4W as the standard rating for this size.
You will find a 1/2W rated 1206 part with <=0.1% tolerance and it will have exotic materials and cost >100x as much while operating much hotter at max power.
These are the standard sizes.
Code Length (l) Width (w) Height (h) Power US Metric inch mm inch mm inch mm Watt 0201 0603 0.024 0.6 0.012 0.3 0.01 0.25 1/20 (0.05) 0402 1005 0.04 1.0 0.02 0.5 0.014 0.35 1/16 (0.062) 0603 1608 0.06 1.55 0.03 0.850.018 0.45 1/10 (0.10) 0805 2012 0.08 2.0 0.05 1.2 0.018 0.45 1/8 (0.125) 1206 3216 0.12 3.2 0.06 1.6 0.022 0.55 1/4 (0.25) 1210 3225 0.12 3.2 0.10 2.5 0.022 0.55 1/2 (0.50) 1218 3246 0.12 3.2 0.18 4.6 0.022 0.55 1 2010 5025 0.20 5.0 0.10 2.5 0.024 0.6 3/4 (0.75) 2512 6332 0.25 6.3 0.12 3.2 0.024 0.6 1