In my story, I have a group of seven characters that are all living together in a sort of community. The two MCs obviously have large parts in the story along with three others. There are just a couple in this group that have small parts, basically they have said only a handful of lines in the whole story. Now, is that okay, in your opinion, to have a couple characters that are just there to add to the size of the group? Should they have bigger parts or is it better to just take them out entirely? Does every character in a story need to have significance or can they be more a part of the setting? (if that makes sense.)
No, you can have bit parts. I've got a character in my story whose primary story function is to wear a yellow shirt. The yellow shirt takes on a life of its own in the story, but the character doesn't really change. He's a small part. His shirt is more important to the story than he is. Having said that, although he is technically a "flat" character in the sense that he doesn't change or take much action in the story, he is colorfully drawn and completely distinctive from the other, more important characters. Readers will never forget who this guy is, and they will remember his name and personality long after he has stepped off the stage. So the real key is this: If two of your characters are performing essentially the same function, or if it is difficult to tell them apart based on their personalities and motivations, collapse them into one character. Characters don't always have to be important, but they still need to have their own unique roles, voices, and personalities.
I think if you just need people around to add to the size of the group, then they might not even need the lines. You can just casually mention that they exist and then leave it at that. For example, if you are writing a scene where you are meeting your friend at his office. You can make the audience understand that this is a busy office environment by having a few paragraphs talking about the 2-3 people that are working feverously to finish their tasks and the guy that is just casually clicking at his mouse in boredom... probably playing Solitare. You don't actually need to give those people lines so that we know they exist. Just give them enough so that they add what they need to add to the story (in my example, they exist solely to give the impression of a busy work environment). But it IS okay to have bit parts to answer your question. Another example where a bit part player would have a line is if say in the same office example I brought up earlier, you just happen to run into the friend's boss as he's chewing out your friend for being late with some work. You might refer to him by name or give him a lot of mention... but that's only because for that part of the story, he's actually relevant.
I've always believed that adding too many bit-part characters who have no actual role in the story tend to overcomplicate things. As with anything balance is key, though, and if this community will be the setting for the entire novel, it wouldn't be a bad idea to give these side characters a few lines every now and then, just to remind the reader that 'yes, this is a community with other people'. It breathes a little life into your setting.
In fantasy, if there is a group, party, or expedition, usually the members have specific roles to play. Some might become fodder for the killing machine of the villain, but they always have a role. I have yet to read a solid fantasy novel that had a party, or group, or 'fellowship' with a few bit players that were only there to add numbers to the group size. In my own novel, unpublished at this point, I have only four dedicated group characters. It sometimes climbs higher as a person or two might travel with them, but it focuses on only those four main characters with no bit parts to increase the numbers. The story doesn't need them. Does your story "need" those players? Does it "need" the extra numbers?
One good way to pull this off is to let the reader know these aren't characters they particularly need to remember, or invest a good deal of interest in, they're background to the overall setting, much like a tree or the person the hero bumps into on the way to the store. I don't even know if I'd give them names maybe start with labels - punkgirl, dirtbag, or a statement like - it was crusading Chloe with her clipboard and mismatched socks running like a gazelle across the campus to get our name on something - what was the cause this week? Conjugal visits for the monkeys in the science lab? I grabbed Steve's hand and told him Run!
Yes, having extras around is perfectly fine. Just make sure they are actual people and not mannequins there to take up space. I remember an interview with Mel Brooks about his movie Young Frankenstein. He related how he wanted Madeline Khan and no one else in the role of Dr. Frankenstein’s fiancé Elizabeth. She however was not sure she wanted the role because the part was such a small one. Mel promised her that he would do everything it took to make her scenes special. And he kept that promise and made a great movie even better. Your couple of minor characters have a chance to add something more than just the impression of more people around. Even if they do only have a few lines make sure they are great lines.
Minor characters can really just be there. They can say things, and have a personality, but in the end, it's not about them. If you need space fillers, just say things like 'a few kids' or 'the boy in the back' or whatever. I do know that characters with lines and names and personalities take up more space then the generic 'person.'