There are 3 issues that cause the lag people are complaining about.
1. (The biggest). The performance of your computer and your local internet.
a. Comcast and other cable providers I have used in the past have a horrendous ping time. Do a test and don't just look at your speed look at the ping for both up and down.
b. System performance, many people including myself (until recently) use underpowered or low memory systems. If you are running a core 2 duo or lower then you are borderline depending on your memory resources you connection (processor handles load from the game as well as load from the network and other resources you are using. Memory has a huge affect on this game. If you operate on a 32-bit OS (you are already reducing your performance on this game even with a nice video card), or you are using 4GB or less then then there will be Virtual memory used which will cause the game and network to run even slower. Much of the lag people experience (not all) is caused by lack of ram. Once I upgrade to 8GB it was like night and day, yet that was all I changed.
c. Server lag latency, this would be lowest on the lag issue, however unlike most games out there (WOW, FFXI, etc). Although having local stations would reduce this, in most cases is not the issue. While everything is server side, most of the time spent is dealing with the local connection to the network from the users system, or the hardware they are using.

A. Obviously you cannot do anything about in most areas in the USA.
B. This is probably the area that affects most people. There are numerous people running 32 bit OS which guarantees that you cannot fully address all of the memory available and your system memory is limited to ~3 GB.


As far as local servers, that does not necessarily mean region locked server. FFXI used regional servers, however they all synced to the California and Japanese servers (hence how you saw people from all regions).

I suspect it will be done the same way as it was done with FFXI, the main difference being that many actions are instanced or server side.

2.0 using fewer resources and possibly being less server side may resolve these issues for those with low end systems.