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You can see the effects of world size here https://terraria.wiki.gg/wiki/World_size (scroll down to see a quick advantages for each type)
ignore Normal/Tiny that is for DS and mobile only, for PC it is the Small Medium and Large options , as you can see from small to medium is a 50%-100% increase in number of mini biomes which is why I recommend doing medium or large for your main world , you can do small worlds if you just want to farm sky islands or something quick.
Small worlds have an advantage in that things are closer , the sky is lower , hell isn't as deep , the oceans are closer to the center because the world isn't as wide , this makes it easier to get to those places and loot them.
The downside to small worlds is there are fewer special biomes that spawn , like pyramids , marble , granite , spider , few random chests and abandoned houses underground , Fewer shadow orbs/ hearts to destroy for loot , less enchanted sword shrines (bad odds to get a sword) really just less random loot over all.
In a small world everything feels crammed together, the world is a bit more artificial feeling because it suddenly switches biomes , don't play on a small world if you like building in the sky , wyverns spawn very low and are annoying.
Bigger worlds obviously have more loot in many forms. More statues, more Life Crystals, more chests. They have more floating islands. They have bigger bioms and bigger number of different bioms of a kind may be found.
On the other hand you have to spend more time travelling. It's harder to build hellevators. And so on.
The chance for rare things is also higher. Like Enchanted Sword Shrines or Fallen Logs.
There are a lot of differences. Not all of them are positive, though.
You can read some description of this matter here:
https://terraria.wiki.gg/wiki/World_size#World_size_comparison