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This idea was one of those. I thought it up because I saw that servers are limited in how many people can exist on one server at one time, not counting all the assets, etc.

Ah, so the idea to use different servers for each city is to support more people?

As TheBoneJarmer mentioned, each server is limited by their hardware. So theoretically by updating the server’s hardware, it will be able to support more people.

I say theoretically, with the more people that interact with each other, the resources needed increase rapidly. To use your example, if 11,000 people were very close to each other, and they were all visible on the screen, every time a person moved their character, the server would need to notify the other 10,999 people about this change.

This is usually optimised, so that you only see like 10-20 people at a time on the screen, and even though there are more people on the same server, they are not close enough to you to see them, so the server skips sending you their details.

This is quite the complex topic, but hope it gives you an idea of how it works. So it is possible to do what you are thinking, and support more people. Either by using extra servers or doing smart optimisations, the implementation isn’t that important.