For any kind of vCenter platform, you need to have a vCenter database, but the question is how your database size affects your vCenter performance.
If adequate resources are available for your vCenter database then the supported versions of vCenter databases, such as Oracle, SQL, and DB2 perform very well. However, you need to understand that a vCenter Server task retention policy and higher performance statistics collection settings can increase the database size dramatically, which in turn will affect your vCenter Server performance. But, the bundled database of either the vCenter Server system or vCenter Server Appliance is a separate matter. The bundled database is intended only for the evaluation of vSphere software or for supporting small infrastructure of up to five hosts and 50 virtual machines. In this case, the vCenter database is collocated with the vCenter Server instance. Logging level also affects the performance and size...