>For instance, if you have a fat friend - do you tell them to their face that they are fat and disgusting?

Either you decide that the friendship will survive you being direct and to the point - then say "you're fat" and be done with it. No use in motormouthing the issue to death.
Or you reach the conclusion that it won't (good friendship!), then say nothing at all. No subtlety will help you then, anyways.