In my opinion, all living things have an energy field around them. With competitive species especially, the presence of a dominating companion will inhibit it's progress. Even though the fish may seem fine, at some level of its consciousness, it feels fear and stress in the presence of its competition. The results eventually show in its growth and health.
I raise convict Cichlid fry in a single tank together. But I won't be able to house them together for long. As they grow they need to spread out. Their requirement for personal space expands as they grow.
However this rule may not apply for schooling fish like Danios, tiger barbs, neons etc. These fish need to be in groups to function properly.