Simply stated. How is it not a MMO? The, game, in it's current state rewards a player by staying holded up in a capital city and queueing up for a cross-server dungeon or cross-server battleground. Yes, players can do this outside of the cities, but why would they if the auction house and class trainers are nearby?
The game went from a persistant, open-ended world in the beginning of classic WoW to a glorified chat lobby by the time ToC went live during WotLK. Cross-server pve and pvp solved the problems of long queues for battlegrounds and gave players a chance to do dungeons without having to manually form a group in chat. But I believe by doing this, it ripped away a core element from WoW which makes it a true MMO.
The ability to log in and run into groups of players while farming mats, questing, summoning other players in front of a dungeon or raid, waiting for the next battleground to commence, roleplaying, or just simply hanging out. The possibilities were nearly limitless before players were given the ability to queue up for instanced pvp and cross-realm dungeons. Nowadays, players seldom venture beyond the vincinity of Stormwind or Orgrimmar. Some roleplayers still hang out in other zones, but for the most part: the "world" of warcraft is dead or is being read it's last rites.
To further segregate players from one another on their server is flying mounts. Before they were implemented in BC, players were given the ability to travel faster then going on foot while at the same time keeping players grounded to the world they lived in. Once flying mounts were introduced, it encouraged players to skip the vast majority of the world except to quickly farm some mats, complete a quest objective, kill another player, and then swoop away.