I don't know anything about the rules for competing at Bub's. As for the SCTA and ECTA -- the 5 liter/1.32 gallon break point is a number where, in the view of the rules-writers, it is convenient to change the class. The concept is that a streetable bike needs a bigger fuel tank - to get realistic range before having to refuel - than a race-only bike. If you have a tank that's under the 5L size you're a race-only bike -- and therefore in "altered" a/k/a "special construction" class. Special construction can have any size tank -- since if you're running twin engines on methanol and a whiff or two of nitro you'll probably need more than five liters. But if you're in modified and your tank is under five liters -- well, on the street you'd need to stop for fuel every half-hour or less (depending on engine consumption) -- not very convenient for street riding. So you need a bigger tank for modified class.
That's the thinking behind the ECTA/SCTA rules. Maybe someone else can give an explanation (or opinion) on the Bub's rules.