By default, duplicating a layer into a new document used to set the document size to the pixel dimensions of whatever object you were copying. However, something happened to my settings that now makes the dimensions the same as the canvas it originated from. Do you guys have any idea how to revert these settings to what they used to be? Are there options for other kinds of things like this hidden somewhere?
I don't know off-hand of a preference or setting that would affect it. Photoshop defaults to the size of the image on the clipboard.
Did you select the object only or the whole canvas? Selecting the canvas before copying would give you the result you are describing. Select the object only by Ctl/Cmd-clicking on the layer thumbnail to restrict the size of the copy.