Before the 40's, bathrooms were outside; the only window you needed was the half moon cut out of the door! It's a different story today with all homes having at least one, and the majority having two or more, bathrooms. And they are indoors, of course.
To properly discuss the bathroom window we have to be very specific about the kind of bathroom we are talking about. It can be the main bathroom, the master bedroom bathroom, the downstairs bathroom, the guest bathroom or the master bathroom half bath and so on.
The common most important thing about any bathroom window is privacy. Size can have something to do with this, so can the type of glass and the style of window you select. All three of these conditions have to be thought out when choosing a bathroom window.
Size is important; why put a floor to ceiling window next to the toilet?
Type of glass is important, as well. If you have no view but like light, put in obscure glass (glass that is manufactured so you can't see through it). If you have a view and you can sit in the tub and look out, don't install obscure glass, think drapes for privacy.
The style of window is the second most important part. It shouldn't matter how small the bathroom is, try and get a venting window into it to vent odour and excessive humidity, especially if that bath has a shower or tub in it.