It really depends on exactly what you need and what your goals are. I'm also not really sure as to what your criteria for small, medium or fully feature games are. Terraria is quite a small indie game, but if that is enough to meet your requirements for a "fully featured game", then the answer is yes.
One larger "made with Corona" game that comes to mind is Skipchaser by Ponywolf (https://store.steampowered.com/app/508410/SKIPCHASER/).
As long as you are sticking to 2D games, the main limitations to what kind of games you can create is your skill level and resources. Creating a game like the ones you've mentioned is doable, but Corona might not be the best tool for creating them. What the best tool is for you really again depends on you, your needs, skills and preferences.
Now, as for the performance impact, that is again really all up to how you create the game. Take Terraria, for instance, if you tried to create a game like that, then perhaps the most important question performance-wise is how to handle off screen objects. If you try to render billions of tiles simultaneously, give them physics bodies, etc. then I doubt any engine could handle that. If you just render what's on the screen, then you run into various gameplay related issues, etc.
In summary, ask yourself what you need from your engine and see if Corona meets those requirements. If it doesn't, are they something that you can forgo or can you add those features yourself through plugins, native code, etc. Then look at other engines, make your comparisons and decide for yourself. I personally see no particular reasons as to why Corona couldn't be used on large games.