Less than 2 lb. 11 oz. – no separation required.
Between 2 lb. and 3 lb. 11 oz. – we separate – no berachah.
Over 3 lb. 11 oz. – we separate and make a berachah.
NOTE: If the majority of the liquid in the dough is NOT water, then we separate the dough without a blessing. The piece of challah is then wrapped in foil and burned in the oven (Ashkenazim discard it with respect). You should not place the separated piece to burn in the oven with anything else that you are baking.
Once the piece is burnt you throw it away in a respectful manner. If you forgot to separate the dough and then the challot were baked, you can gather all the challot together and recite the blessing.
