I currently have a world in 1.16 Java edition. I read that I can update my world to newer version however the chunks that have already loaded will stay the same, newer chunks will form with the new version algorithm.
My question is, what is the size of the chunks that have already formed, does it have to do with the areas that I have visited in my world and if I visit a location that I haven't before, I will experience it forming according to 1.17 version?
Yes, your current world map is anything you have visited plus a buffer zone around that area defined by your chunk distance setting. If you have that setting high, then a large area will have loaded around anyplace you have been, and you might have to go a distance to find new areas. A lower chunk distance setting will mean smaller areas have loaded and you won't have to go as far. You can use a map editing program like MC Edit (not sure if that's updated to the most recent Minecraft version or not, I haven't used it in years) to trim off any chunks you don't need anymore and then let the game render new chunks in those areas.
I've heard that Mojang is going to try to make the transition between new and old chunks more smooth than it has been in previous versions where terrain has updated, we shall see how successful they have been when the time comes, but you may see obvious chunk boundaries that don't match, so be careful where you trim off chunks if that's what you choose to do.
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To tell them how to live is to prevent them living.
I don't think there have been actual changes to the biome or terrain maps in 1.17, which will actually be 1.18 since all the changes to the underground (aside maybe decorative features) and mountains will be pushed back to 1.18, scheduled for the end of the year. Even then, existing terrain should blend in except around mountain biomes, while the transition from y=0 to y= -64 chunks will probably have some form of bedrock wall around them or retro-genning of chunks below y=0, including removal of existing bedrock (players normally shouldn't be able to mess with it so it will cause no issues; if you did use bedrock-breaking exploits and something you built at bedrock level is ruined then so be it, that's why you don't use exploits).
In either case there will be chunk walls underground between caves in new and old chunks underground but they will only be noticeable when caving, or where surface openings cross chunk borders, and Mojang already previously made two unannounced changes to underground generation, in 1.7 and 1.13 (the latter was also entirely avoidable, they only changed the way the RNG is used so instead of the chance of caves being "Random.nextInt(7) == 0" they changed it to "Random.nextFloat() < 0.142857F", which gives the same chance but since "nextInt" and "nextFloat" operate on different bits the chunks caves generate in changed), there is also evidence that strongholds changed in 1.16 since Chunkbase lists 1.13-1.15 and 1.16 (changes to strongholds are particularly disruptive since eyes of ender can lead you to where they would have generated in old chunks, thus you don't find anything there, or a partially generated structure with no portal).