Thanks. Tell me though how does this apply to wondrous items. I thought even a fish could use Say a cloak, or ring or necklace. I thought even dragons could utlize items that were not their size.
My personal opinion is that this in the end is a DM call. I don't like the idea of a fish being able to wear humanoid clothing despite the size issues but that is my own personal opinion.
Rules Compendium (p 84-85)
As long as you’re the same size category and the same general shape as the armor’s original owner, the armor functions normally for you. However, inappropriately sized or shaped armor can’t be worn. Armor doesn’t resize to fit a wearer of a different size category, nor does armor constructed for a humanoid-shaped creature fit a nonhumanoid-shaped creature. In cases where a nonhumanoid-shaped creature tries to wear armor created for another nonhumanoid, the DM should use his best judgment.
Shields don’t change size to match the wielder. You can’t use an inappropriately sized shield.
Weapons don’t change size to match the wielder. You can wield an inappropriately sized weapon with a penalty (see Inappropriately Sized Weapons, page 151). Regardless of a weapon’s size, as long as you can hold a weapon you can activate its magical abilities.
So I think it is clear that magic armor, shields, and weapons don't normally resize unless it is a special ability of that particular item. Magical clothing however the language is less precise...
Size And Magic Items (3.5 SRD)
When an article of magic clothing or jewelry is discovered, most of the time size shouldn’t be an issue. Many magic garments are made to be easily adjustable, or they adjust themselves magically to the wearer. Size should not keep characters of various kinds from using magic items.
I personally think the above flexibility in magical clothing & jewelry is grounded in the assumption that we are talking about relatively humanoid shaped creatures. How could a fish wear an earring even ignoring size issues, maybe stab it through his fin? But wouldn't the fin be an analog to hand/arm and not an ear? A fish wearing a cloak? Wouldn't you need a neck? Admittedly these are interpretations. I think this is one of the many reasons why D&D needs a DM to adjudicate.
Via the "Shapechange" rules you still need the required bodypart to wear said item "When the change occurs, your equipment, if any, either remains worn or held by the new form (if it is capable of wearing or holding the item), or melds into the new form and becomes nonfunctional" but again how close to a humanoid body part is good enough, is at least partially interpretation, IMHO.
Here would be a start of some kind of decision list for magical items:
(1) Is the new creature the correct size or can it properly hold the original magic item?
(2) If it is armor, shield, or weapon it does not resize (unless the item specifically says it does).
cannot wear it, it melds(3) If it is clothing or jewelry it will resize or be customizable enough to potentially fit the new creatures form.
(4) If the clothing or jewelry resizes to the new creature's form does the new creature's form have the appropriate body part to wear it?
If yes it can wear it; if no it cannot and that item gets melded into new form. (*) If the table goes in for
Rule 0 then the DM could make house-rules to allow exceptions to the above.