Either is fine, I would stop where you are unless you expect to store heavy pots, liquids or oils on that shelf. It’s beautiful tile in a beautiful space.

Yes, must go to the ceiling now.

There are no musts in this situation. Honestly. Tile protects the wall. If there’s nothing on that shelf that’s going to mar the wall, it’s entirely your choice. Personal preference. If you are uncertain about your preference, start putting things on the shelves and then decide.

Personal preference - pictures posted above by eam44 are great. None of them go to ceiling yet they all look very nice.

I think most of the examples below would look better to the ceiling. YMMV. We went to the ceiling.

If you go to the ceiling, It's going to be a challenge to cut the tile to fit closely around the crown molding. Probably depends on the skill of your tile person.

We think doing the backsplash all the way to the ceiling will allow this space to feel and look complete. Here are just a few visuals from some kitchen and bar designs we've done.

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