LocalDB is SQL Server Express, which is SQL Server. General SQL Server guidelines will usually apply to LocalDB as well, unless you have very specific situation. Note that SQL Server Express (including LocalDB) has an additional limit on the MDF file size, which in 10GB in SQL Server Express 2012.
One thing to keep in mind is that the format was designed to be fast, and not compact. For example, an empty database will create an MDF file that is a couple MBs big.
autogrow
and autoshrink
seem to be the way to go for managing the MDF size, if you want to keep it down as much as possible. There are performance-related trade-offs, discussed in this KB 315512 article and this post by Paul Randall, including the discussion in comments.
As per file system fragmentation - creating the database with big enough file size should help, as the OS should be able to find big continuous block(s) of disk space easier when asked at once. When the database file grows and shrinks it is more likely to be fragmented at the file system level. I found this post as well, discussing using a tool to "manually" defragment a given file. Looks promising, but I have not tested it.