The 1.17 update for Minecraft—dubbed Caves and Cliffs—was announced at the beginning of October and focused heavily on the "caves" side of the update, leaving many to wonder what would be happening with Minecraft's cliffs. Today, during a Q&A, some of Minecraft's developers stated that the 1.17 update to the game may increase the height limit.
As it exists now, the height limit to Minecraft is set at 256 blocks. We know that the mountains will generate differently after the 1.17 update is released, but we haven't seen a solid example of what that would look like. A video posted by developer Henrik Kniberg showed us stunning mountains that appeared to be dozens of blocks taller than normal, but that video came with a disclaimer that the mountains shown were a placeholder.
However, when lead gameplay designer Agnes Larsson was asked if there would be a height increase, she said that they were "looking into it." She elaborated by saying, "...we cannot promise anything at this point, because it's kind of tricky tech-wise to extend the world height and we also, for example, need to look into that we don't get performance issues from it." Larsson did add that the development team really does want to increase the world height.
In a follow-up question, she was asked when we would potentially get an update on whether or not the increase would be coming with 1.17 and she said that we would hear from the team "early next year at the latest." It should be noted that, when giving that timeline, she sounded hesitant rather than confident that we would, in fact, have an update by then.
The Caves and Cliffs update isn't due to be released until the summer of 2021, so a lot of things could happen between now and then. Although if Mojang is able to increase the height limit without sacrificing performance, we could see extremely dramatic changes to the way that natural mountains generate. At this point, it is unknown what a new height limit would be—and any guesses would be purely speculative. That being said, even a 50 block increase would theoretically change the horizon for the better.