Interesting discussion. Just to clarify, I really do like to see 20 mm of "air" between the top of the tire and the fender. Here is a photo:
Anything less risks trouble when your tires pick up small rocks and drag them through the fender. Even on gravel roads, you shouldn't get the "scrtchh" of a rock rolling between tire and fender more than once every 500 miles... You can ride a bike with less clearance, but it's a little risky for my taste. I know too many people who've fallen on their faces when fenders collapsed and jammed the front wheel.
There really is no reason to have less clearance on a custom bike. The fender lines on the bike shown in the photo above look great, see
There really is no reason to mount the fenders closer to the tires, except that when you remove the fenders, the clearances may look excessively large. (Just like my car, my bike always carries fenders, so that isn't an issue for me.)
Of course, you don't need (and won't get) 20 mm all around the tire, because your fender doesn't need (and cannot) to be 40 mm wider than your tire! You won't drag debris along the sides of the tire, so less clearance there is fine. You just need enough so that if your fender's position moves a bit after you lean your bike against a wall or something like that, the tire doesn't rub on the fender. 10 mm probably is fine there.
The chainstays and fork blades will encroach a little further into your clearance. It's fine to indent the fenders there - the fenders are firmly supported, so they won't budge. In those places, you just need enough that frame flex, wheel flex or a slightly out-of-true wheel won't cause the tire to rub on the fender. I'd say 5 mm is OK, 8 is better.
Of course, you can ride bikes with much less clearance. I have done so for many years. The fenders may rub a bit when you rise out of the saddle, and you have to hope for the best when riding over gravel, but most of the time, it's fine.
Jan Heine
Editor
Bicycle Quarterly