I would imagine its a bit of both. For example, if a server can host 1,000 players (arbitrary number, I have no idea the actual capacity) you wouldn't want all 1,000 of those players all in the starting zones at the same time, everything would be too overcrowded and it would be a mess. Most of the high population servers turned off and on new character creation multiple times each day. If you were very determined to get into one of those servers you were usually able to.