You are already on the right path, much ahead of many people if you are asking the how and the why
From the wire size, I'm assuming the fuse size would follow?
Yes (or vice versa). The important thing being that: max current < Fuse rating < Wire rating
The short answer, figure out the max current of your system, size the wire based on voltage drop and ampacity, size the fuse to protect the wire. The main battery fuse should generally be at least 1.25x of max current.
There are two factors in sizing the wire "ampacity" and "voltage drop"
Ampacity = how much current a conductor can safely carry (variables that affect this are wire diameter, insulation temperature rating, ambient temperature, type of metal, and other environmental factors like whether the conductor is bundled with other wires in conduit or on a hot roof etc)
Voltage drop = this affects the efficiency and potentially functionality of your system (variables that affect this are wire diameter, wire length, type of metal)
From a safety standpoint the former is by far the more important factor, both need to be considered when sizing wire, generally, people try to keep the round trip voltage drop of the whole circuit below 3%, maybe people aim for 1% or 2%.
A calculator like this one from
blue sea systems can calculate both factors for you, if you fill in the proper variables (if you expect temperatures above 85*F click the 'in engine compartment' check box).
Here are two ampacity tables one from the
ABYC (marine electrical code) and one from the
NEC (national electrical code) they should be roughly the same given the same variables.
One thing to be aware of, many 'voltage drop calculators' will calculate voltage drop but do not account for ampacity. Make sure that you account for both calculating wire sizes.
I've seen many examples of people using 250A terminal fuse on the battery, but I don't understand the WHY. Thanks!
Not sure about this, it would be a properly sized fuse for a 12v system with a 2000W inverter and wire with an ampacity over 250A.