In this paper, a thorough model for the porous diffusion layer of a polymer electrolyte fuel cell (PEFC) is presented that accounts for multicomponent species diffusion, transport and formation of liquid water, heat transfer, and electronic current transfer. The governing equations are written in nondimensional form to generalize the results. The set of partial differential equations is solved based on the finite volume method. The effect of downscaling of channel width, current collector rib width, and diffusion layer thickness on the performance of polymer electrolyte membrane (PEM) fuel cells is systematically investigated, and optimum geometric length ratios (i.e., optimum diffusion layer thicknesses, optimum channel, and rib widths) are identified at decreasing length scales. A performance number is introduced to quantify losses attributed to mass transfer, the presence of liquid water, charge transfer, and heat transfer. Based on this model it is found that microchannels (e.g., as part of a tree network channel system in a double-staircase PEM fuel cell) together with diffusion layers that are thinner than conventional layers can provide substantially improved current densities compared to conventional channels with diameters on the order of 1 mm, since the transport processes occur at reduced length scales. Possible performance improvements of 29, 53, and 96 % are reported.