One thing I haven't heard an answer for is the question "If you only have one server, how will you fit thousands of people in one city?" Imagine if you logged in, doesn't matter what server because, jokes on you, there aren't any, and you go to your town and what do you see? thousands of noobies raving in the streets. How do you expect to have only one server, meaning one town, not multiple copies of one town. or even worse, every training area is filled and you have to fight other players just to kill a level 1 creature.

http://help.elderscrollsonline.com/app/answers/detail/a_id/505/kw/

There'll be instances of each area, capped to whatever they think is right. You get to choose the types of people you'd prefer to play with as well when you log in (eg specify groupers/rpers/solo players), then you'll hopefully be in same instance as those types.

Oh so its sort of like a channel system?

Called the megaserver

Divides channels to easily teleport to your friends

It is a channel system. You are placed in a channel based on your guild, friends list, who you play with among other factors I'm sure.

Okay, thanks for the quick answer!