Although I don't understand their exact setup, in theory each world and its associated IP is to separate the connections and their associated data transfer, so merging it becomes problematic when you get a situation like a patch or expansion release especially. They don't want to bottleneck too many connections, so they have multiple bottles, so to speak.
I've seen 600 players in an instance before. We get 400 at hunt trains on Aether at an expansion release. But they rate limit the amount that can enter more and more the closer it gets to 600.What makes you think that's not something they can do easily? If I'm not mistaken. The cap of regular zones are around 250-300 players, which is something they could reduce and introduce permanent instances (1,2,3) to compensate for the size.
Now they could cap it and divide it into instances, but since each instance is an extra server program, I suspect they would not want to run instances permanently for all zones just for the off chance that they reach cap due to a hunt train or S rank or other event. If they don't have a way to allow everyone into an open world zone, it potentially prevents someone progressing the MSQ which isn't so good, and currently although 600 is rough to get into the few times it's happened, it's still possible.
In contrast, they maintain instances forever for Field Operations and that's less overhead because they are shared across worlds. Their duty servers are designed to handle multiple instances for the event that content gets farmed or has a lot of people doing it. Even then, I have seen the cap reached for Amdapor Keep instances once in my 10 years of play. Due to bots farming it, I literally couldn't queue for it.
I actually think their aim is to make the MSQ a visual novel, because some of the people who do the MSQ are not really gamers (ie. they are the partner of someone who plays and not a gamer nor very tech-savvy).Which is a shame. The MSQ may have a really strong and excellent points throughout its run, but I don't think it should hold the game as a hostage. Afterall, this is a video game, not a visual novel.
The concept of a visual novel is valid as well. It's long been theorized what an "interactive movie" or "interactive series" would look like, but it's never taken off - guess why? Because it already exists in the form of video game stories like FFXIV's MSQ. It's the same reason the metaverse didn't take off. Because anyone with sense knows it exists in the form of video games already.