A method used by Notch to divide infinite maps in the alpha release. They are 16*16*128 blocks. When wandering the world, only chunks nearby are loaded and have activity (mobs spawning, trees growing, water flowing, dropped items disappearing etc. etc.), while the other world chunks are 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.
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