@SmolChlo “Club Penguin” lol now that is a name I haven’t heard in a loooong time.
To further answer your question, some people like to use furry avatars, others like semi-human beasts, some like plain old humanoid avatars. Custom avi are a lot of work but I’ve seen incredibly talented people create stuff like dragonborns or almost actual dragons, giant snakes, etc. No limits really. I chose to get a plain looking avatar but I’m thinking of getting a good looking one commissioned at some point.
There are rooms which are purely for hanging out, chat, listen to music, watching videos/movies, etc. There are some worlds with fun little quests/puzzles and interactions. Outside of VRChat there are also other virtual worlds but none as popular right now. Also since VRC added avatar scaling (ie. shrinking/growing) it has become very easy to create sizey worlds with that in mind. They added stuff like collision so that we can hold tinies without them “falling” through giant hands or bodies. They added climbing too, so that tinies can “explore” giants. Oh and while the soundscape isn’t exploited to all its sizey potential IMHO, the spatial 3D audio is delightful… having a SW moving around my head from one shoulder to the other sent ASMR-like tingles to my brain 
The only thing is that in VRC, the most advanced worlds (those with proper physics) require the use of a PC. The PC will use its GPU and CPU to render the world, basically streaming the info to your headset. Otherwise you can still access some sizey worlds in “standalone” / Quest mode (ie. with the headset alone), but it’s a bit more limited.
Alsoooo, I’ve heard it can be quite jarring at first to be picked up when tiny, hehe… I’ve literaly heard (‘squeeeee’) it, I mean 