Replacing 17 in. Tires and wheels with 16 in. Tires and wheels,will this mess anything up like speedometer out of sync? Will computer compensate, and all is OK?

Or is it a mistake?

What you want to do is keep the same outside diameter.
Rim size is not that important except the offset, and fastener arrangement. Be sure that is right or it WILL "mess" things up.

Thanks, kitch428