Each chapter has one or more scenes in it and there are rules when a scene break has to happen and when it is optional.
According to widely accepted manuscript formatting styles, scenes are separated by the # sign, placed in the middle of an empty line.
Since each scene can have only one POV (see my section on POV), we must end the scene if we want to write from a different character’s POV. And yes, it’s permissible to break the scene during a conversation or action, as long as POV changes. POV overrules scene continuity.
We should also switch scenes if the time or place of the story changes dramatically enough to warrant a new setting description (see my section on setting). We are a little flexible on that rule though.
Let’s say our character John walks down the street and enters a café. We can have him walking and then fit in a transitional sentence that puts him inside the building which should be followed by a setting description. There is no need to break the scene since we are still in John’s POV.
But let’s say John walks and sits on a park bench to relax or something. Then he picks up his walking again a couple of hours later. We could have him sitting there and give a sentence or two on what he is doing before we update the reader on the time and have him get up and walk again. No scene break required.
Instead, we could switch moods between sitting and getting up. Let’s assume when he sat the weather was great. While he relaxed, a thunderstorm brewed overhead, and now it’s dark and ominous. Let’s add a disturbing phone call as the reason he gets up and walks on. At that point, we could use a bunch of transition text to make walk A flow into walk B, but I would rather sit John down in a happy, relaxed mood, and break the scene. I start the next scene with setting description to change the mood from pleasant and relaxed to dark and disturbed before I throw the phone call at him. It gives the call more severity and I can send John out on a brisk walk to whatever he needs to do next.
Several books suggest that each scene must have its own tension and it must accomplish something to justify its existence. That means there should not be any “sitting by the window watching the world go by” scenes unless the POV character has some sort of internal dialogue that accomplishes a shift in the story/plot-line while he is doing it. Seriously, though. You don’t want nothing-happening scenes anyway. It’ll drag your pacing into the sub-basement and your readers will yawn/fall asleep on you. Forget page-turner status.
Instead, each scene should have its own mini-cliffhanger moment at the end, a kind of hook that makes you want to read on. This is especially important for chapter ending scenes. I usually try, but I’m not always successful. Sometimes, the story itself hands you a natural break and I feel I should take it when that happens. 50-page chapters are probably not cool for everyone and contrived cliffhangers that don’t really go anywhere are not nice in my opinion. And I do want to be nice to my readers.