I had the same exact injury many years ago, when I was 17yo, from a dance injury. I had torn both the cartilage and one of the ligaments that supports my left knee. I was unable to walk, due to the pain, and the MRI showed (just like yours) that part of the cartilage was torn and lodged under my kneecap. I had to proceed with surgery, to be able to walk, and also to continue my dancing at the time.
Two words of advice:
1. If you opt for surgery, make sure you have a qualified orthopedic surgeon doing the procedure. It's not a complicated procedure, but the skills of a good orthopedic surgeon will make a big difference to your post-operative recovery
2. After surgery, get consisent physical therapy - this is the key to complete recovery - you need to strengthen the surrounding muscles (quads, calves) to support the joint.
I ended up with 60% cartilage in my left knee and partial ligaments as well. I completed my physical therapy and 2 months after surgery, I was performing my dancing at a regional show. I was a little cautious, but with practice, I was able to do the performance without any problems.
I hope this was helpful to you. Don't worry about the surgery. I do think that these types of injuries can get worse if they are left uncorrected in the long run.
All the very best.