I can see why closing BT would be less desirable as they just survived an Invasion that could have seen the Continent closed down already. To the other two options offered, closing down Colonies would only offer a potential 108 characters to the other islands, while Dwilight would offer a potential 449 characters to the other islands (Beluaterra offering 251). From those numbers, it seems closing down Dwilight would, assuming the rate of moving is equal for all islands, offer the biggest impact on density on the other Continents (About a potential of 90 per island).
This is not considering retention rates and all that which has already been mentioned, it's just looking at pure character numbers.
On the other side of the coin, Dwilight is the second largest island by some margin and that is with a 1 character per player rule. That means nearly half the player base is there, which could be awkward. Only thing is, what with the 1 character per family rule, it seems unlikely character density will rise too much on Dwilight. If closing an island is for the purpose of driving character density dramatically upwards, I expect you'd need to shutter more than one continent to have a noticeable impact on Dwilight's density.
