Just because something isn't, doesn't mean it's impossible - and I was arguing against the "impossible" part.
Its pretty much impossible unless the entire world is some giant flat landmarkless place just waiting for player houses. If it wasn't, then there would be limits that make it not work as people want, and thus thier statement is true
You don't understand instances either, huh? You can have as many as you want. Eg, everyone can have their own personal instance, ala Otherworld, where they created a whole world, if the devs wanted it. So, no, there is no limit to instanced houses. However, if Tamriel was actually done to scale, like Daggerfall was, the world would NEVER be full of houses, even if everyone on earth played it.
Ugh your ignoring the context of the game again.
Otherland works because its a MMO, i mean within the context of the game universe, they have places to put those instances, aka other "servers" within the context of the game universe.
Also Daggerfell was not to scale, it was just very large, and thats unreasonable for a MMO