From Official Factorio Wiki
Chunks are used for:
- Map generation. When the player runs around, has a radar explore the map via sectors or has artillery shells fired across long distances, the map is revealed in chunks.
- Chunks are "switched off" to save CPU cycles. If nothing important happens in a chunk (e.g. there are only fishes swimming around in the chunk) the chunk is not computed in the next Tick.
- The pollution model is based on chunks, and pollution spreads to neighboring chunks.