10240x4080 isn’t that big, but it’s big enough to have pretty large performance implications with smooth terrain.
Roblox doesn’t handle terrain in “chunks”. Generally speaking, smooth terrain is pretty efficient but it will start to eat memory at high volumes like this. If you’re dead set on using smooth terrain, a good option is to enable StreamingEnabled. This does have its drawbacks and can make scripting a pain if you’re not familiar with it, but it will help performance a great deal.
If I’m correct StreamingEnabled also streams terrain.
So far I have seen some pretty big and fairly detailed maps created with smooth terrain. Do keep in mind that certain devices will find it hard to upkeep with the requirements and load that place fluently. Also in studio you are generally limited by the type of hardware you possess, so that is entirely subjective. There could be a limit, but so far I have not bothered to look into it.
From my experience with large bumpy terrain, it can be really slow for some people, and quite the opposite for others. I’d say your islands current size is probably the largest you could make it without it being too slow for some players. Others are suggesting to use StreamingEnabled, that’s probably what I’d try and do, but if you don’t want to use that you’d probably have to scale it down a bit, especially if you want to add a lot of buildings.