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My wife and I both are originally from India and we currently live in California. I am on H1B and she is on H4. I switched my employer last year and I got a new and extended date on my I-797. Now I am working on extending my wife's visa using the Form I-539.

From my understanding, Form I-539 will extend the date on her I-94. Now, my question is that - until when would she require to get her visa stamped on her passport? Is it only if she exits US? Is she allowed to stay until the I-797 date without getting her visa stamped?

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A US visa is only necessary to travel to the US to apply for entry. If she never leaves the US, or if she ever leaves the US without intending to return, she does not require a US visa.

See, for example, https://travel.state.gov/content/visas/en/general/visa-expiration-date.html.

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