I don't think there is any rule for sea state, but the A class limits racing to wind speeds under 22 knots (I think). That would be my limit.

Regarding the pure pleasure of sailing; right after I got the Blade I was at Daytona and the surf was running. . .four feet? +/-. That was pure enjoyment! Surfing under spinnaker is a real treat. IIrc, conditions were pretty mild.