I usually like base layers to fit pretty snug, I fear that if it was baggy it’d bunch up under other layers and not be too comfortable when moving around.
Also when you get out there sweating your berries off five days in, merino bags out quite a bit and isn’t nearly as snug as it was when you started. At least that’s been my experience with first lite stuff. They have added some spandex to counteract it though.
I've never had merino base layers that were what I would call baggy. But I did try the Icebreaker Bodyfit merino tops and hated those. It was like wearing a shirt that was 3 sizes too small. My base bottoms fit like tights, but my shirts fit like a non-baggy shirt without being a compression shirt.
Good point about no getting them too small. I also found Icebreaker to run 1-2 sizes small and sorta short (I’m 6’4”).
First Lite runs true to size for me in 2XL. The newer Aerowool runs just a touch snugger in sizing but doesn’t shrink or get baggy as much with wash or wear.