Worldbuilding is the name of the staggering process of constructing an imaginary world associated with a fictional universe.
World Builder Blog
Like most of the fundamental laws that governs certain fields, this axiom isn’t something extremely difficult to understand. The golden rule of worldbuilding, is an implicit contract passed between you and your intended audience when you first start laying down the foundation of your fictional setting. Essentially, what this contract says is that unless specified otherwise, everything inside your world is assumed to behave exactly as it would in the real world.
The Golden Rule of Worldbuilding
Open world and free roam are terms for video games where a player can move freely through a virtual world and is given considerable freedom in regards to how or when to approach particular objectives (Wikipedia).
Examples: Legend of Zelda, Grand Theft Auto, Minecraft
Closed world games limit the player to following a specific story line.
Examples: Super Mario, Space Invaders
The process of designing a game world can take the form of drawing on paper, modeling in 3D software, or coding a 2d or 3d prototype.