While the relationship between sensory stimulation and tasks and the size of the cortical activations is generally unknown, the visual modality offers a unique possibility of an experimental manipulation of stimulus size-related increases of the spatial extent of cortical activation even during the earliest activity in the retinotopically organized primary visual cortex. We used magnetoecephalography (MEG), visual stimuli of increasing size, and numerical simulations on realistic cortical surfaces to explore the effects of increasing spatial extent of the activated cortical sources on the neuromagnetic fields, location estimation biases, and source resolution. Source localization was performed assuming multiple dipoles in a sphere model using an efficient, automatically restarted multi-start simplex minimizer within the Calibrated Start Spatio-Temporal (CSST) algorithm. We found size-related effects on amplitude and latencies and differences in relative locations of the earliest occipital sources evoked by stimuli of increasing size presented at the same eccentricity. This finding was confirmed by single patch simulations. Additionally, simulations of multiple extended sources demonstrated size-related increase in limits in source resolution for bilaterally simulated sources, biases in location estimates for a given separation of sources, and limits in source resolution due to source multiplicity within a hemisphere.