Worlds in The Sims 4 are split into 5 separate neighborhoods, and those neighborhoods are further split into individual lots (commercial or residential) of playable area. There is also a “6th” neighborhood with only a Park.
Any open spaces in playable areas of the world are called Public Spaces. Public spaces allow Sims to roam freely without restriction and without loading screens. Learn more about Worlds and Loading Screens here.
In each individual neighborhood, there are “playable” and “non-playable” areas. Playable areas consist of lots and public spaces that Sims have access to, and non-playable areas consist of empty homes and random world decor that make the neighborhood feel like a mini-world. The surrounding area around the playable land does not represent other neighborhoods. Each neighborhood has different world decor.
As illustrated in the photo above, only the “boxed” area is playable, and anything outside of that is off limits. To give you an idea of how a single neighborhood looks in game, I’ve prepared two video mini-tours of a neighborhood in Willow Creek and Oasis Springs.