An Unlimited Area game is a game with a play field that has no borders. Or at least no borders that can't be crossed, somehow. They usually fit into two game genres, adventure and strategy. With this kind of game, new regions of the play field are generated when the player reaches the edge. This way, the player never comes in contact with the edge, and the sense of infinite play regions remains intact.
Games with an unlimited play field are usually given limits such as build perimeters and stray limits. Build perimeters are limits to the distance that you can add a building away from existing buildings. Stray limits are factors such as fuel, hunger, and sometimes expandable terrain blockages.
The main challenge to making a good unlimited area game is hardware based limitations, but since computers are improving so rapidly, I believe unlimited area games may be feaseable on consoles and server systems.
Nobody wants their game to run slower than it is supposed to run, so unlimited area games often have many optimizations. Some optimizations are intert buildings, simulated off-screen activity, erasure of unused land, minimal motion/collision detection, change-triggered individual redraw events, and limited-existence objects.
Intert buildings are objects that just exist at an x,y,z position. They just sit there and look good, so to speak. All objects that interact with these buidings do all of the work, for instance, when you click a building, the mouse detects that the building is there and pops up the appropriate tools.
Simulated off-screen activity is activity that will not change once you have set it, and therefore it is not worth it to keep updating x,y,z positions and directions and all of those other variables. For instance, if you have a shipping unit going a short distance between two sites, simply measure the time it takes to go the distance, and use a timer. When the timer hits a certain value, load it up, when it hits another value, unload. When the player comes back, just drop the unit down on the relative position based on the current value of the timer.
One of the more common activities, and a source of inconsistency and repetitiveness, is erasure of land. When the player no longer has access to the region, everything there gets deleted. I reccommend using this one sparingly, as it is the main reason for slightly irritating and boring gameplay patterns.
THE most commonly used way to optimize a large game is minimizing motion and collision detection. This means every character stands in one place, or has a pre-scripted path to walk on, and nothing can stop them. Another way to do it is to limit activity to things active on the screen. Often, enemies have a 'range of detection' that limits the amount of thinking they need to do.
Another optimization, one that was more common during the begining of games, is individual object redraw. When something moves, erase its old image and draw a new one in the new location. These days, when you are making a simple game, it doesn't hurt the computer to simply redraw everything on the screen, whether it moved or not.