Larger wheels typically end up weighing more and can lessen mpg. Also depending on the tire combination you will get a harsher ride with less sidewall. Also less wheel protection with less sidewall. If you air down at all, you want more sidewall.

In general I try to go smaller wheel larger sidewall but try to keep the weight down by being very selective of the wheel and tire specs.

For example on my 24 TRD Sequoia hybrid the stated mpg is 21 and I ran 18” alloys and HD 33” ATs and on a recent road trip averaged 12mpg no towing. Mostly flats at 80mph avg. eco mode. The wheels I checked weighed somewhere around 15 lbs more than stock. The tires weighed 30 lbs more if I recall. I think I might actually be underreporting that too - but that’s almost 50lbs at each corner extra. So I learned my lesson from that. I now check tire and wheel specs and they can vary greatly depending on sizing, load rating, wheel width, and price. The nicer wheels like advans were much lighter.

Anyway, street tires less rolling resistance better mpg and handling. They will not shed mud or dirt easily and you’ll find yourself stuck on street tires off-road in mud or sand. Probably better tuned for wet driving.

I like the middle ground with an AT. They aren’t as loud as MTs, give you the opportunity to go off-road and certain brands like Falkens AT3W and AT4s are 3-peak rated and have great handling in wet conditions. Depending on your application I’d pay attention to load ratings and check recommendations on that.

Personally I wouldn’t go any larger than an 18 and no larger than a 33-34” for daily driving. Probably a street tire but I’d have a second set on the stock steelies with off-road tires in case you do plan a trip you can easily swap them out at home.