If i can just put handle bar extenders (vertically extending) and a longer seat post what is the advantage of getting a larger frame? Is the idea to get better top tube length?

I ask because I am riding a frame which is a bit small and I was planning on doing those things.

In my experience, the handling goes funky when you have a very long "tiller." Also, the higher you raise your arms up the more the hands need to come forward, and they only make stems with so much forward extension.

You can certainly do it, for sufficiently modest values of "a bit small."

Most people won't have a problem going a few cm smaller, but as mentioned above, handling gets sloppy with too long or too short of a stem. You also might need a lot of spacers to get the bar high enough (assuming the fork isn't cut yet), or a steep rise on the stem. The one thing you really can't fix is if the seat tube angle is way too steep and if you can't get a seatpost with enough setback. My proportions and modern geometry trends make it very difficult for me to size down, but the average person can get away with a little.

Since you're in Bike Mechanics: Use the right tool for the job.

You don't mention just now much of a change you're considering.

Up to a point the use of spacers or longer stems is OK. But when you start shopping for extreme length or want to stack a collection of spacers under the stem you really do need to stop and consider. Sure, it'll be rideable. But it won't be an optimum ride for a number of reasons if you resort to extremes on a few spots.

I tried this. I'm 6'4 and started on a 56cm road bike. I maxed out the stem length & rise and went with an offset seat post with the seat pushed ALL the way back as far as I could get it. I could ride fairly comfortable. However, after an hour, my comfort would quickly deteriorate. I tried gloves, seats, etc... Finally, Once I had enough money, I sold off the bike and got fitted from a reputable shop. Then I started looking @ bikes. I ended up getting a 61cm. My first ride felt very different, but wasn't sure if it was better. After two or three rides I could definitely tell a difference. No more pain in the hands & my butt seems a little less choosy what seat it's on

Just my 2 cents

How do you know it's too small? Have you ever been professionally fitted?

I always thought that a too small frame with the seat jacked up and handlebars jacked up and extended would have squirrelly handling due to the pivot point being so far behind the handlebars. kinda like using aero bars

Of course frame size matters.

If it's just 2cm off, it won't matter too much. 4cm off, then it may not be so nice, but still possibly doable. 6cm off and yer nuts!

A new stem and seatpost (if necessary) sure are a lot cheaper than a new frame and fork, though.

Yes and no. There's some darn good deals on frames down at Citybikes in Portland. If Chico's short on funds but long on ability, buying the right size frame and a nice donor bike can give good results.

Agreed, I got my Pinarello complete from City Bikes for $400, but that's a long way from Toronto. I guess it all depends on the OP's current too-small bike, how much too-small it is, Chico's build-up skills and what kind of other bike availability he's got.

It's not all cookie-cutter formula for frame-size. Some folks have a "frog" torso - shorter legs and longer body & arms. They can ride well on a too-large frame than the usual formula of stand-over height would suggest. And the reverse is also true. Get a "real" measurement, then ride a few different sizes to find your personal comfort-zone machine. People who are good at customizing a bicycle to a customer should be able to help at this. A shoe-salesman masquerading as a bike-shop employee may well overlook this.

ok fair enough... so lets say 4cm is the limit though..my winter bike is currently way more than that ... thats why i wanted to change it up.
Would foldable bikes have a lot of issues with "squirrly handling" if this is true.

Yes, small-wheeled bikes handle oddly if you're not used to them.

To really nail fit and handling, no, the frame has to be close.

Yes, you can raise the saddle almost as much as anyone could ever need, but many riders need a specific saddle setback from the BB, for their most efficient pedaling. The seat tube angle can be different between small and large frames, to attempt to fit more riders.

You can also raise handlebars, using long-quill stems or those that have and extension arm that is angled up. The main issue in setting height this way is that nearly any long quill is more flexible than the support given by a larger frame. Some riders will be more sensitive to this than others.

Stem selection also involves reach, which is the distance between the steering axis and the center of the handlebar clamp. You can't easily buy a stem with more than about 13 cm of extension, and even if you do, it can result in handling problems.