A well-made waistcoat will be tailored with the assumption that it will sometimes be the outermost garment, meaning that the fit needs to be appropriate even at points that are usually hidden beneath the jacket. The exception here is formal vests; since tuxedo or dinner jackets are never removed the accompanying waistcoats are often created backless for convenience and comfort and feature a simple strap in the back rather than a full span of cloth.
Nearly every point on a vest has relevant benchmarks for fit. At the bottom, the vest should be long enough to completely cover the waistband of the pants. Any visible shirt around the waist will destroy the top-to-bottom sweep of the suit fabric. Too long of a vest starts to look absurd, so the trousers on a good three-piece suit will be fitted high, around the natural waist.
The top of the vest should be high enough to be visible when the jacket is buttoned (there wouldn't be a lot of point in a vested suit if it was hidden half the time). An inch or two is ample, however — the vest should leave plenty of necktie visible, or else the man's chest starts to look constricted. The neckline should be broad enough that the fabric of the vest doesn't cover the points of the shirt collar or slip beneath them.
A good waistcoat should be fitted; that is, it should have a distinct waist. Like a suit jacket, the fabric should come in at least slightly at the narrowest point on the wearer's body. Most will be somewhat adjustable by means of a strap in the back.