You only need to cut out the area that's rotted. Typically you cut out the smallest square or rectangularly-shaped hole and replace it with new ply. But if the rot confined to a small area around the toilet flange and you have access from below, you may be able to add blocking between the joists and repair a small amount of plywood rather easily.
If this is just a single layer of ply and you need to cut a square out, cut the hole so 2 sides will be centered directly over joists. Then add blocking between the joists (perpendicular or joists) to support the 2 remaining sides. This ensures your patch isn't a weak spot in the floor.
As for the wall that you are concerned about, if you can't see any signs of damage, you're probably good to go. Floor rot doesn't make it up a wall unless it's really bad. I'd get down on my knees for a close examination and press on the tiles looking for movement that may clue you in on a rotted or mushy substrate.