The probability that a site has at least one individual of a species ('occupancy') has come to be widely used as a state variable for animal population monitoring. The available statistical theory for estimation when detection is imperfect applies particularly to habitat patches or islands, although it is also used for arbitrary plots in continuous habitat. The probability that such a plot is occupied depends on plot size and home-range characteristics (size, shape and dispersion) as well as population density. Plot size is critical to the definition of occupancy as a state variable, but clear advice on plot size is missing from the literature on the design of occupancy studies. We describe models for the effects of varying plot size and home-range size on expected occupancy. Temporal, spatial, and species variation in average home-range size is to be expected, but information on home ranges is difficult to retrieve from species presence/absence data collected in occupancy studies. The effect of variable home-range size is negligible when plots are very large (>100 x area of home range), but large plots pose practical problems. At the other extreme, sampling of 'point' plots with cameras or other passive detectors allows the true 'proportion of area occupied' to be estimated. However, this measure equally reflects home-range size and density, and is of doubtful value for population monitoring or cross-species comparisons. Plot size is ill-defined and variable in occupancy studies that detect animals at unknown distances, the commonest example being unlimited-radius point counts of song birds. We also find that plot size is ill-defined in recent treatments of "multi-scale" occupancy; the respective scales are better interpreted as temporal (instantaneous and asymptotic) rather than spatial. Occupancy is an inadequate metric for population monitoring when it is confounded with home-range size or detection distance.