As with any game design, you'll have to balance simulation and client to server communication, how you implement your game systems, etc. We tell world builders not to use areas larger than 256 by 256, but even that, if you chose to simulate 10,000 things in that area would of course fail.
The easiest thing that new game developers, especially ones new to online game development get hung up on is area size, but it's the least of your concern. What's going on in an area, and how you've implemented it, how and what you choose to simulate and communicate is the tough part. We just happen to correlate the two for you by pointing out that an area represents a unit of simulation, so don't make it too big, unless you aren't simulating anything in there.