It's the same style old games used to use to limit the players movement and vision - have you ever noticed how there are always have cliffs surrounding everything in a very artificial way, and tunnel you through to the next area?
I'm not exactly sure what you mean. Why would they clump 500 people in one tiny area? The game is massive, you wouldn't have so many people in the one area at the one time.
Sure it's a bit tighter than FFXIV, but FFXIV has alot of empty bland space that goes to waste. I think you also find in FFXIV most people just clump up in to one area anyways, and the only reason you see few people is because the server prioritises what characters to load for you (obviously party / linkshell members being high priority).
Okay I just looked up some "Environment" videos for Blade & Soul and rewatched this one, and I noticed it looks very spacious. Not sure why you think it looks too small. Also, perhaps you are mislead - most MMO's have quadriple the amount of areas that FFXIV has (not exagerrating).
Edit: Here check this out - http://youtu.be/y7maQAEHfO8?t=2m7s





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