In general there are no limits to how you design your Avatar. However there are some unspoken guidelines that people in VRChat appreciate when followed.
1. Try to keep Avatars below 10,000 polygons. Use a low poly model, with the high poly version baked as a normal map to maintain the high quality on a low poly model.
2. For music/sounds...
A) Turn off play on wake. B) Lower the volume, often 0.1 is a good balance. C) Set the spatial to 3D so any sounds originate from your avatar instead of server wide. D) Don't spam it, or pick annoying sounds.
3. While it is sometimes fun to have an excessively scaled avatar that is 40 feet tall, try to recognize when it is appropriate to use it, and when others may find it annoying. For example it wouldn't be right to use one during Gunters Universe.
4. Try to keep avatars PG-13 unless used in a locked room.
