The major problem in all MMORPG's is that you can not place 500 people inside the space of a gymnasium. There are certain aspects of computer games in general that you just can't replicate a real-world equivalent because few games actually let their NPC's have a schedule. Off the top of my head The Ultima games, Elder Scrolls, and Fallout games do this. Thus everyone knows that NPC is located at a specific location, and they will be crowded around it. You can do some lazy-instancing in this way by making the door way into the building for which the NPC is located so that only 16 people are ever in the building, but that starts to break immersion when your friends go "Hey I'm by Rowena" and they go "I'm also by Rowena, where the hell are you?" And they're both standing in the same spot in different instances.
Archeage has seams, but they're not very obvious except from the air ships. When you cross a zone boundary you actually see a huge chunk of draw distance change. Trust me, you do notice where the seams are, as the PvP/PvE mode changes immediately when you cross them. The only places that feel completely seamless in that game are when you go out to sea on a ship other than the rowboat.
"Loading tunnels" are just a visual trick in V1.0 so that when they did the console version that it was visually seamless. However look at Nier:Automata and notice it is also seamless, and much newer. No draw distance artifacts at all. But a single player game doesn't need to reserve memory bandwidth on the video card for drawing 250 different players in the field of view, so you only ever see "loading time" in that game when you die and have to reload.
But here's the thing. It actually DOES have loading tunnels. They're just not FFXIV V1.0 style. Nier puts a tunnel between the city area and the desert, the desert and the place where you fight one boss, a tunnel between the flooded city and the city (the sewers), a tunnel between the carnival and the city (also sewers), and between the city and the commercial district/castle area. In fact the reason it's laid out this way is because the city changes.
The mistake V1.0 made was making the loading tunnels empty. Had there been actual things in them, like the Chocobo porter and a repair NPC at the junction point, people would have not drawn attention to it.
V2.0's mistake was splitting up the home areas. This was a mistake, and I hope they consider consolidating Ul'dah, Gridania, Limsa Lominsa and even Ishgard so that they are seamless up to their exits. I don't think it would be truely necessary to make them seamless with their surrounding areas, owing mainly to how Uldah's layout was kinda ridiculous to hide the loading time where as Gridania, Ishgard, even Idyllshire have these really long sets of bridges into them.



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