Heya chainsaw! Congrats on the program you have built at Central Florida.
I think the way diminishing returns works on formations is how close the player's formation IQ is to 100. The higher the formation IQ the slower they progress. I think this begins as the player's formation IQ gets over 50.
Example: I personally practice 20 minutes formations for Pro Set, 3-4 defense, and special teams. Last season I decided to add Notre Dame Box so I tweaked my practice plans to give it 20 minutes also. My freshmen and sophomores all progressed the same in Pro Set and NDB. My upperclassmen gained twice as much in NDB than they did in Pro Set, but they were starting at +/-20 in NDB and +/- 60 in Pro Set.
I picked 20 minutes because I would compare my player's IQs to Texas/Penn State/USC to see how my upperclassmen compare to theirs - and then adjusted accordingly. I also looked at where a Jr* QB's IQ starts as well as upperclassmen LBs and DBs. Higher IQ for the QB influences interceptions and completion percentage. Higher IQ for LBs and DBs influences interceptions.
I've experimented a lot with practice plans over the years. I used a progressive practice plan several seasons where I would practice formations 60 minutes each during exhibition(Pro Set/3-4/Special Teams), 30 minutes during non conference, 15 minutes while I played the other division, and 0 once I played games in my division. My idea was to get the formation IQs boosted early for the underclassmen and as the season progressed and IQ formation diminishing returns kicked in I would greatly increase practice time for player skills. I did this also because I rarely saw player skills increase during exhibitions - formation IQs always increased before player skills. I thought this was a better practice plan than having a fixed amount all season long - but it was too much hassle to remember to adjust the practice plan every few days.
I know coaches that practice 2 minutes every formation and then focus 15-20 minutes on their primary formations. Even only practicing 2 minutes the IQs progress pretty good over 3-4 seasons - simply because the diminishing returns never kick in with 2 minutes.
One other thing to consider with practice time is diminishing returns for player skills. I'm at an elite and I usually recruit players with core attributes nearly maxed out the day I recruit them. (If I recruit an OL with 90 STR and 90 BLK do they need 25 minutes of practice of STR and BLK for four seasons?) I also have a program built that plays FR and SO players a lot to help their growth. I'm not sure I need a lot of position practice time compared to a D1AA or D2 school.