Basically, how many gear 'meshings' you have, the gear width, and the mass of these gears is what determines the losses. The smaller in diameter you make these gears, even with the same weight gear, the 'momentum' will be less and therefore less energy wasted. You simply what to keep a transmission as simple as possible, and as small as possible, while maintaining a healthy 'durability' factor.
But, I seem to be bouncing around on the topic, so I will stop now.
