So I got a bit sizer from a horse store and measured Daisy's mouth for a bit and it came to 4 3/4". As a read I think it is about 1/4" is supposed to stick out, is that correct? Should I go to a 5" or just stick to 4 3/4"? Thank you.
Sizing depends on the bit including the cheekpiece. Loose-rings should have a little more wiggle room (about 1/4" - 1/2" extra) to help prevent pinching (rubber bit guards can also help but not if the bit is too small or in certain competitions). Fixed cheek-pieces (such as dee-rings, eggbutts, full-cheeks, et cetera) should rest comfortably beside the horse's mouth. Since they do not pinch, they only need about 1/8" - 1/4" extra.
Bits should not have too much slide (indicating that the bit is too large) nor dig into the horse's face (indicating that the bit is too small).