Unless you have scrap laying around, you'll be buying a 4x8 sheet of drywall anyway (unless you can find damaged panels or the hardware store sells half sheets). So anything less than 4x8 will be about the same amount of work to patch, so cut out as much as you need. Just remember to try and end in the middle of a stud.
If it's 8ft. from floor to ceiling, cutting out all the way to the next stud would mean you'd only have to tape one seam. This would likely be easier than patching a bunch of holes.
As long as you have secure anchoring of the 6" strip of drywall to the studs behind, and since the strip is along the ceiling, strength is not a major concern here. Additionally, the primary reason for using joint compound is not for strength but to create a smooth work surface for finishing.
In applications where the drywall will be completely covered, such as with a hard paneling, installation can be finished with no mud/joint compound at all.
In your case, since it's in the bathroom, along the ceiling, as long as the strip is out of the splash zone of the shower I wouldn't bother with mud.
Now if your shower is unusual and the ceiling is in the splash zone, then waterproofing will be necessary and you should use cement board not drywall - but it sounds like drywall or plaster was already used, so replacing it with more drywall isn't a problem in this case. (Or, if it is, you have much bigger issues already with the bathroom that are outside of the scope of this specific question.)
Best Answer
Like any other drywall patch - there IS a raised area where the tape is. But you feather compound out 6-12" and there is no NOTICEABLE raised area, as the deviation from "exactly flat" is too small for the eye to see.
Tape with a 4" knife. Re-coat with an 8" knife. Finish with a 12" knife.