In practice in other existing MMOs, you have bounded areas of the game where people are in view of each oher, with player counts designed to work within the tec

In practice in other existing MMOs, you have bounded areas of the game where people are in view of each oher, with player counts designed to work within the technical constrians of the tech. Then teleport/portal around to get to other areas. But even within an area you can cut down on the n^2 in various ways, with one set of estabilished techniques cutting down server side compute and other set for network communications.