How far can / should I drive on empty?

I recently bought a new car (use, but new to me), a 2007 Toyota Corolla. I was switching from a 2003
Corolla. One of the things I noticed early on was that it seemed like I was covering a lot less distance
on a tank of gas with the new car than I was with the old one. I had done some research beforehand
and the new car was supposed to get significantly better gas mileage, so this didn't quite make
sense. I also noticed that whenever I put gas into the car, it would only take 10 gallons to fill it,
compared to 12 -13 gallons in my previous car. At first, I wondered if it was just a smaller tank in the
new car, but then I found through multiple web searches that the 07 Corolla should have a 13.2
gallon tank, so then I began wondering if perhaps my gas light is coming on long before it is truly
getting low. If it truly still has 3 gallons of gas leftover when I'm filling up, that should be able to get
me somewhere around an extra 100 miles. I decided to take a risk and test that theory, just driving
around town with plenty of gas stations nearby if it should get low, and it seems to be proving my
suspicion. I have driven over 70 miles on the gas light so far and it's still going, not giving any signs
that it's truly getting low. I know it can be bad on an engine to run a tank too low on gas, so this now
begs the question, if my light is coming on early, how far should I let it go on the light before I fill up?
At what point, does it start getting bad on the engine?