i am at episode 3 in years 5-7 and i have completed level 3. i just want to explore. how far do i have to go for that?

A universal law of Lego games is you unlock characters for free as you play as them in Story Mode. As long as that doesn't include a villain, you'll just have to find their icon and buy them; villains are usually unlocked for purchase when you defeat them in Story Mode. But really the most reliable answer is just finish the story, that's when the part you want really begins.