The best interpreter of the word “world” is the context. We cannot simply apriori define the word, without looking at the context and what Scripture says. Owen says:
Secondly, That no argument can be taken from a phrase of speech in the Scripture, in any particular place, if in other places thereof where it is used the signification pressed from that place is evidently denied, unless the scope of the place or subject-matter do enforce it. For instance: God is said to love the world, and send his Son; to be in Christ reconciling the world to himself; and Christ to be a Propitiation For The Sins Of The Whole World. If the scope of the places where these assertions are, or the subject-matter of which they treat, will enforce a universality of all persons to be meant by the word world, so let it be, without control. But if not, if there be no enforcement of any such interpretation from the places themselves, why should the world there signify all and every one, more than in John i. 10, “The world knew him not,” which, if it be meant of all without exception, then no one did believe in Christ, which is contrary to verse 12; or in Luke 2:1, “That all the world should be taxed,” where none but the chief inhabitants of the Roman empire can be understood; or in John 8:26, “I speak to the world those things which I have heard of him,” understanding the Jews to whom he spake, who then lived in the world, and not every one, to whom he was not sent; or in John 12:19, “Behold, the world is gone after him!” which world was nothing but a great multitude of one small nation; or in 1 John 5:19, “The whole world lieth in wickedness,” from which, notwithstanding, all believers are to be understood as exempted; or in Rev. 13:3, “All the world wondered after the beast,” which, whether it be affirmed of the whole universality of individuals in the world, let all judge? That all nations, an expression of equal extent with that of the world, is in like manner to be understood, is apparent, Rom. 1:5; Rev. 18:3, 23; Ps. 118:10; 1 Chron. 14:17; Jer. 27:7. It being evident that the words world, all the world, the whole world, do, where taken adjunctively for men in the world, usually and almost always denote only some or many men in the world, distinguished into good or bad, believers or unbelievers, elect or reprobate, by what is immediately in the several places affirmed of them, I see no reason in the world why they should be wrested to any other meaning or sense in the places that are in controversy between us and our opponents. (Book IV, chapter 1)
There are places in Scripture where the word "world” definitely does not mean all without exception as in John 1:10; 7:4; 12:19; 14:17; Luke 2:1; Acts 19:27; Rom. 1:8; Col. 1:6; 1John 5:19; Rev. 12:9 (cf. Rev 13:3, 8). It is a simple denial of the fact that the word "world” is used in many ways to always take the references where it used to be speaking of all humanity without exception. The meaning must be determined by the context and exegesis.
In this way, Owen interprets "world” in John 3:16 to be speaking of the world of God's elect (see Book IV, chapter 2, see also here). The first "world” in John 3:17 is the human realm into which Christ was sent; the second and the third are for God's elect (see Book IV, chapter 3). The expression "world" is used in these passages to denote the extent of God's grace to all who believe. It refutes tha...