For 40+ years, I've always set the chain length based on the largest front chainring / largest rear cog, with the rear derailleur set up appropriately and the tension (lower) pulley about a 135 degree angle to the rear axle (where up is 0 degrees). Although using the large/large combo is considered "cross-chaining" and not entirely optimal, the chain should be long enough to enter this combination.
As others have stated, setting up the chain length based on minimal sag in the small / small combination can result in a chain too short to shift onto the large/large (or even several large rear cogs when on the large chainring). In the least-worst case, the chain simply refuses to shift, whereas other scenarios involve potential damage to the chainring or derailleurs.
Another thing I've learned through experience is to never presume the components on a bicycle are the ones it was sold or speced with.
I also don't always trust the "lay out the old chain and compare" method, as the previous chain may have been too installed short or too long by some other owner or mechanic. In addition, excess wear can make a worn chain measure out to 3 links longer than optimal/original. Using the large/large method avoids this.