I'm thinking specifically of a balrog here. The base is 65mm, the wingspan is 260mm. In a restricted space, like tunnels of Moria, I'm assuming he can move down any tunnel with a width of =/>65mm. Do I need to take any account of the actual size of the model (apart from the practicality of fitting him into the scenery)? Similarly, the bridge I built was 40mm across, wide enough for one figure at a time. This must mean that the balrog can't actually stand on the bridge, so the hobbits can stand at the other end making rude noises and he can't do a thing about it . Am I correct?

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Sometimes you CAN be the only one in step...

A 2' wide person could easily walk across a 1' wide span, while a 25mm base is supposed to represent about 5'. So I imagine you can rule it however you want. The base size is useful for determining whether someone is in difficult terrain or not, perhaps you can compromise and call the bridge difficult terrain. This gives the hobbits 1 turn of rude noises