Quote Originally Posted by Seraphor View Post
It's to stop people being carried further than they should be. You could join a party as the only one who hasn't cleared it, then you'd be guaranteed both coffers at the end.
So it does make sense to limit the chests based on how many people have completed it. It's not perfect, but it does it's job.

One improvement could be that each person in the instance who has not yet completed it, adds a 25% chance of a coffer dropping at the end, which would mean 4 would grant a 100% chance of one coffer, and 8 would mean 200% chance, so 2 guaranteed coffers, which is the same as what we have, but would also allow for a chance of more coffers dropping for 1-3 and 5-7 new players.

It doesn't however make sense to lock people out of early fights when completing later ones, e.g. being loot-locked out of E5S when you only complete E6S. This only seems to exist in order to preserve the sense of progression, to make them a sequence of fights instead of just four disjointed instances.
The core of the problem is definitely the lockout caused from doing later fights. This feels like the devs wanted to simulate a mega dungeon like WoW Classic Molten Core, but kept it as a bunch of individual instances. It's just really clunky and doesn't fit this game system.