Hi, thanks for your question and sorry for the delay.
Technical questions are best sent to the "yocto" mailing list, which you can join here: https://lists.yoctoproject.org You can also join the community through the IRC channels. For more information, see the Community pages.
As an initial answer, I believe you can use poky-tiny to get a usable system down under 1MB. Tom Zanussi gave a talk on this at ELC 2014. You can see the slides, and also listen to the talk at this link.