Until you get down to body fat levels below 5-8%
There are a lot of people out there that will never reach this level without starvation. There are A LOT of factors that determine how a person's body carries and distributes fat. Humans are animals. Fat is the bodies long term energy reserves. I'd be very surprised if there was an actual study that showed that humans can ONLY reach their physical peaks in performance if they reduced their body fat percentage to 5-8%. I'm thinking the real numbers are probably anywhere between 5% and 25% based on the individual and based on the natural biologic variation in homo sapians. I haven't seen anything to back that up, but that's my educated guess.
Indeed... per the American Council on Exercise, reported on Health Check Systems:
Classification
Women (% fat) Men (% fat)
Essential Fat 10-12% 2-4%
Athletes 14-20% 6-13%
Fitness 21-24% 14-17%
Acceptable 25-31% 18-25%
Obese 32% plus 25% plus
A similar chart can be found here. Note that this chart considers anything below 8% (for men) to be unhealthy.