Good information Thaz. Please remember though that this is per heightmap. Your area's terrain is usually made up of multiple heightmap nodes. For heightmap nodes, Thaz is correct, it is best not to go above the 256. Personally, I find in most cases 128 works out quite well. It allows enough for occlusion in most terrain styles. And you can cut up the heightmaps if you need.
However, through a lot of testing, I do not recommend a single area being above 1000x1000 large. The best we found for performance is between 256 and around 700 max area size depending on game/project design and scope.
Of course, this does not take into account the scope of the game you are building. I do recommend doing some testing with different sizes linked up and a simulation of what you would want to have in each area. I tend to fill the areas up with as much clutter as possible to get a half way decent idea on what our limits are for the scope of the game/project, and what we can expect for Players and NPC's.
But testing is paramount so you can make adjustments easier later on in development.
Do remember with using Seamless you can build a nice full world, it is just broken up into "areas" to help with resource management and overhead to keep the fps at a manageable rate for the players (and developers).
