Re: Known Space; why so small??
The odd human has explored further - the Ringworld is much further (248 ly) and Beowolf Schaffer went to the Galactic Core - but outside of known space is not colonised or mapped by humans or known alien races. The size varies depending on the time period.
My own view was that I thought it was an analogy to the 'map of the known world' during the dawn of the 'Age of Sail' on Earth. They knew there was a continent across the Atlantic, and they knew there was a continent in the South of the Indian Ocean. Many explorers had been to both before. Columbus was not even the first to America. However, America and Australia were not yet colonised and there were no reliable maps.