For the first week in their "safe room" my cats only had access to about a 3' high "tree". Not because I thought that was all they could handle, but simply because I couldn't fit a bigger one in that particular room. As soon as they graduated out of that room though, they immediately had access to one that go up about 7', and of course they immediately went right to the top
They also have access to a "cat run" up high on the wall, that is probably 8' or 9' up. I think that's about as high as I want them to go for two reasons:
1. At some point it becomes problematic to get them down from there if I need to for some reason.
2. Serafina has decided that it's fun to leap off it now, landing on the bed like a trampoline (sometimes on to of me if I'm on the bed!). And I probably would worry if it were a couple feet higher.
As far as where the kitten should sleep, when the kitten is brand new, and scared, and homesick, and acclimating to the new members of the household, it is often useful to confine him to a smallish room where he can feel "safe". Then open up the rest of the house over time. But that's usually only for the first week or so. After that, one consideration is the little guy getting squished if you are the type that rolls over alot in your (or your partner's) sleep. So again that consideration mostly goes away after say the first few months or so. After that point, it's really just a personal choice. Your cat will adapt to either, it's just a matter of what you want.