Any character moved to a new server would retain their items/level etc. This is something that has happened before with FFXI and that game has had an existing world transfer system for years since the last time they expander servers there. The only kicker with FFXIV is going to be the Free Companies. They can't do what they did in FFXI and just give the leader a fresh unopened linkshell. They need to be prepared to fully transfer FCs to the new servers. Also it pretty much isn't mechanically possible to increase server populations as there is only so many concurrent connections the hardware can handle.. That is the whole reason for implementing new Worlds. They haven't said how many they are adding so we'll have to see, but people are going to have to start actually logging out...