There is something for both sides here: FATEs DO scale -- but only up to a point. But for the most part, it depends on the type of FATE you are dealing with. Some FATEs are NMs that come with their own mobs, and these do NOT scale. The mobs spawn, and continue to respawn, on the basis of the FATE's parameters. However, other FATEs that include a defense do tend to spawn MORE mobs each respawn wave whenever another player joins. This does not mean mob power scales individually, nor do NMs scale individually that I've noticed. (Though, I've tanked very few FATEs to measure their impact against my armor dependant on the number of players present.)