Footprint on the right is garbage as it does not allow space for proper solder fillet to be formed (if 3D package represents real terminal dimensions) and minor component misplacement will result terminals to be at least partially out of the pad. Also larger pads provide more mechanical strength. Making too small pads for no reason (like increasing PCB density) is pointless.
I wouldn't be so dismissive; rule I heard is, as long as there is one fillet, and no pins resting on soldermask (gross fit / alignment error), it's okay.
Relying on toe fillets (under the part) may make headaches for assembly and inspection, though.
Toe fillets are generally preferred as they are easy to inspect, and 2nd preference for side when possible (so, the tab can do here, maybe not so much the leads, but the leads of a SOT-223-4 certainly can get some).
Mind, I'm not involved in assembly, so this may be in-house specific, out of date, etc.
Packages like SOT223 are usually expected to dissipate some power, so larger copper is common. Most PCB designs add a lot more copper to that tab.
If you are tight in one direction, you could shrink from the generic footprint, but you should leave some overhang to allow a solder fillet and inspection.
Check against the exact part you will be using.
There are also SOT89 packages for medium power devices.
Not to mention DFNs -- the SO-8 style (variously PDSO-, PDFN-5x6, etc.), and 3x3mm packages, are very common and perform quite well.
Tim