The term the known universe referred to the area of the universe that was explored and documented by humans. The vast majority of this space was claimed to be within the realm of the Padishah Emperors, who referred to themselves as Emperors of the Known Universe.
Though the emperors laid claim to ruling the known universe, in reality it was considered to be greater than the size of the Imperium itself. During the reign of Leto II, the Bene Tleilax sought to establish colonies outside of Leto's empire, but still within the known universe. The Tleilaxu believed that Leto's prescience ended at the borders of the Imperium. They were incorrect, as Leto came to demonstrate.
The size of the known universe increased sporadically over history. The most significant growth in the universe charted by humankind came at two specific points:
Behind the ScenesEdit
The borders of colonized space are never accurately described. Even after the merger of the Bene Gesserit and the Honored Matres, when the known universe was larger than it had ever been, the full extent of manned space is undisclosed.
However, some projections can be made based upon the known locations of stars and basic Dune history. The human race began on Old Earth and colonized numerous worlds around other stars. These ranged from nearby stars within 20 light years, to several stars 100-200 light-years away from Earth, and the furthest known colonized star of the Imperium, Beta Lyncis, which was 410 light-years away. However, even Beta Lyncis (and its planet Ishia) is well within the Orion Arm of the Milky Way Galaxy. Also, it seems that the Old Imperium remained centered on the general region of Earth - consider that the Atreides and Harkonnen homeworlds, Caladan and Geidi Prime, were each about 20 light years from Old Earth respectively.
Assuming that Dune takes place in the Milky Way Galaxy, it can be clearly surmised that the Old Imperium remained situated in the Orion Arm (even though Frank Herbert calls it a "multigalactic empire"). It is possible that there were outposts outside of this region, such as Tupile, or the Ixian colony which Leto II discovered through prescient vision. But for the most part, the pre-Scattering Imperium was in the Orion Arm.
The Scattering, of course, changed all this. The people of the Scattering not only spread throughout the Milky Way Galaxy, but made fold-space jumps to other galaxies such as Andromeda. In this way, people lived too far and wide to be governed by a single force. This, combined with prescience-cloaking genes, achieved Leto II's Golden Path.