I have been told that 1 million is the optimal limit for records in an object but not what exactly this means and I cannot find this very important topic discussed in any of the documents.  

My questions are: 

1) How bad is this performance hit as you pass one million? 

2) Is the performance hit exponential?  (ex: after 1 million you see a 1% slow down but after 2 million you see a 10% slow down)

3) Is there a hard limit?

I cannot find this information anywhere and it is very important as my client will be going over a million records within 20 days and does not have a purge plan in place.