I have read on nlab and other sources that I can't backtrack that the localization process of a category can lead to size issue. More especially, starting from a locally small category $\mathsf C$ and $\mathcal W \subseteq \mathrm{Mor}\, \mathsf C$, the category $\mathsf C [\mathcal W^{-1}]$ might not be locally small. As intuitive as it is, I had some hard time finding such a size changing example.
The simplest I can find (if I do not mistake) is the following. For the sake of rigour, let say we work with Grothendieck universes (but I think it is exactly the same to work with a fixed model of some set theory [like ZFC] and proper classes). Fix Grothendieck universes $U$ and $V$ with $U \in V$, and let $S$ be $V$-small but not $U$-small (i.e. $S \in V$ but $S \notin U$). Then construct the category $\mathsf C$
- whose objects are : $x_0$, $x_1$ and all $s \in S$ ;
- whose morphisms are : $x_0 \to s$ for all $s \in S$, and $x_1 \to s$ for all $s \in S$, and of course the identity morphisms.
$$ \mathsf C : \qquad \begin{matrix} && \vdots &&\\ & \nearrow & s & \nwarrow &\\ x_0 & \rightarrow & \vdots & \leftarrow & x_1 \\ & \searrow & s' & \swarrow &\\ && \vdots & \end{matrix} $$
Then $\mathsf C$ is clearly $U$-locally small (the hom-sets are empty or singleton, so $U$-small). Then choose $\mathcal W = \{x_0 \to s : s \in S \}$ and localize. We end up with a category
$$ \mathsf C[\mathcal W^{-1}] : \qquad \begin{matrix} && \vdots &&\\ & \stackrel \swarrow \nearrow & s & \nwarrow &\\ x_0 & \leftrightarrows & \vdots & \leftarrow & x_1 \\ & \stackrel \nwarrow \searrow & s' & \swarrow &\\ && \vdots & \end{matrix} $$
which isn't $U$-locally small as $\hom_{\mathsf C[\mathcal W^{-1}]}(x_1,x_0) \simeq S \notin U$.
However, this example seems very artificial and ad hoc. What are the natural examples of size changing localization ?