The problem with large realms is that they have an oppressive effect on the continent, or at least the area around them. If you are a small realm located near a large one, either you're their friend, or you're going to get invaded very painfully.
And when I say "friend," I'm not talking about any particularly two-sided sort of relationship.
Yes, right now, with our player density issues, low-density realms are worse for the game. However, no matter what the density, the effect of large realms on their area doesn't go away.
You are overlooking one thing though Anaris. Realms like GX will still have the same effect despite their smaller size. You can't avoid large realms. People will simply find ways to work around it. I feel like if we do get enough players, we will simply see the days of old CE alliance.
