How Complex Should Mecanim State Machines Be?

I have dug out a thread from the Unity forums where a user with 700 animation clips asks the pros whether Mecanim will support this and is given some concrete advice:

Q: We had around 700 animations on the player (that number is still rising BTW) and I was wondering if mecanim will be able to handle such a number?

A: Well the intended design here is to use sub statemachines. About performance it doesn't matter how many states exists, what counts is how many transitions exist in the current state(s) and how many animations are currently being blended (on all layers combined)

After looking at your graph I would recommend making 4 sub state machines.

Jump + Fall - Walk + Turn - Crouch - Prone

Then each of these areas could have the space and layout they deserve.

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UPDATE: After experimenting with sub state machines and blend trees for a while now, I am slowly figuring out how to effectively use them.

This would be my recommendation to other people finding this topic:

1. Blend trees can cut away entire dimensions of the problem space. If your character animates differently based on speed, health or other properties, but essentially still does the same things, you can use blend trees to kill any complexity that would arise from this right away (and you can nest blend trees, too).

2. Create layers for any animations that need to be superimposed on others (a typical example is shooting, which could happen while holding onto a ladder, jumping, running or squatting). Layers let you can decide whether these superimposed layers override bones or only contribute (bone masks control which bones are affected).

3. Whatever animations remain now should be organized into groups and put into sub state machines. A sub state machine is actually a folder, not another state machine. Transitions never go to a sub state machine, but to a specific state contained in a sub state machine. Likewise, transitions out of a sub state machine don't just go up, they lead to a specific state outside the sub state machine (and possibly inside another sub state machine).

To provide an example for how I resolved the messy situation that lead me to ask this question, here's the revised version:

With hanging, kneeling and sliding being sub state machines. Here's the kneeling sub state machine, for example:

I left the basic ground-based motion (running, jumping and falling) in the root state machine. Many of those states are actually blend trees (for example 'Locomotion' is a blend tree between standing, walking and running based on speed, same goes for 'Jumping' which blends between a standing jump and a running jump based on speed).

So the moral of the story is, don't fear sub state machines and know all the tools at your disposal in Mecanim - which is a bit difficult since the Unity docs currently only describe the what, but not the how or why. I hope this helps other new users finding this post :)