What effect does tire size have?

So now that I've been playing for a bit, I can safely say that tire size makes a huge difference.

The most significant difference is that larger tires have a much easier time getting through mud, snow, and water. Cars with larger tires will get through this terrain quicker, and is much less likely to get stuck as well. The difference is large enough that mud which would completely trap your vehicle with a smallest tire size can be driven through with ease on the largest tile size. Additionally, it would appear that larger tires allow you to go through deeper patches of water without taking engine damage.

Another benefit to larger tires is that that larger tires have an easier time driving over rocks, slopes and other obstacles you come across in the terrain. Larger tires are also faster than smaller ones, although this does mean you need to be more careful about watching your speed (so you don't flip over).

The main downside to larger tires that I've seen is that larger tires appear to be less stable than smaller ones. I'm basing this primarily on my experience with the Chevy 1500. The Chevy with the largest tire size is much more prone to flipping over than when it's equipped with a smaller tire. In fact, I was never concerned about flipping the Chevy over until I upgraded to a larger tire, after which I started flipping over constantly (compared to the zero times I flipped it over before). I suspect, although haven't confirmed, that the difference in stability depends on the vehicle.

Luckily, you don't just need to take my word for it, since YouTuber SD1ONE has done several tests with tires, including the effect of tire size. His video confirms most of the benefits of larger tires I've outlined above, although it doesn't really touch on the decreased stability.