There are several factors you should considering when judging the severity of a fall.
The most important is the fall factor. That's the distance of the fall (where the climbers started minus where they ended up) divided by the amount of rope between the climber and belayer. In most climbing situations, fall factors are relatively small. A fall factor of 1.0 or above would start to worry me, and the UIAA fall factor of 1.77 is the metric by which your rope is rated (some number of UIAA falls). Wikipedia has a very good description of fall factors if you're looking for more information.
The second factor you should consider is rope abrasion. As the climber falls, the rope stretches a lot, and the rope also rubs against whatever it was resting on (including carabiners, rock, trees, etc...). If the rope were rubbing against a sharp rock, a worn carabiner with nicks, or something else that is sharp, you might end up with a rope which has physical damage. This damage will occur primarily in the sheath, and can lead to a core shot in the rope. If the rope is damaged during a fall, then it is time to retire it.
The important thing to notice is that the fall distance has no impact on the severity of the fall. You can take huge whippers all you want, if enough rope is out (low fall factor) and the rope isn't rubbing on anything sharp (no abrasion) then the fall is safe for the rope (though you might decrease its life span, but that's another discussion).
