Chunk

A method used by Notch to divide infinite maps in the alpha and beta releases. They are 16 blocks wide, 16 blocks long, and 128 blocks deep. When wandering the world the nearest 81 chunks are loaded, arranged in a 9 by 9 grid around the player. These chunks may have activity (mobs spawning, trees growing, water flowing, dropped items disappearing etc. etc.), while the other world chunks are inactive, stored on your hard drive. If a player was to go to an area that is beyond the already generated chunks, new chunks will be generated and stored to the drive. As of the December 20th update, SMP servers save chunks way less often in most cases. Chunks don’t resave if they got saved in the last 30 seconds.

Known Bugs

 * In SMP servers, some players might not load all chunks, seeing a huge chunk gone, with complete sight of the void. If they fall into it, they'd keep teleporting to the current height they were at before entering the missing chunk, making them stuck. This can be prevented by using a teleport command (non-modded servers use "/spawn" to teleport to the spawn), teleporting them to an area that won't teleport you to a certain position by each tick.