You know, it really depends. I'll redirect- forciably, if need be- a larger dog from sniffing Indy if I see Indy is getting tense- and he does NOT give obvious signals- his ears go up, his tail goes up, and he tenses- but if you're not used to his body language or you're not watching him closely, you may not eralize he's being stressed out by it- and he will turn and snap 'without warning' (he warns, it's just subtle). So generally, I'll step in and intervene- I'd rather someone think that I'm rude, rather than that my dog is vicious!
Pretty much the ONLY time I have to do this is when we run into loose dogs on walks- if Indy is off-leash and the larger dog is off-leash, he's fine, and if both dogs are onleash, I just stay out of range with Indy. He's fine if he's got space to get away, but onleash when he feels threatened? He'll give a warning snap and snarl. It's measured, it's controlled, and he won't carry it further and hurt another dog, but it could easily start a fight if the other dog got offended- and even if they don't, PEOPLE get all "OMG YOUR DOG IS VICIOUS" and frankly, I'd just like to prevent that. But some people just don't think anything of letting their dog rush right up to other dogs- who may or may not be friendly!