Then new people complain they can’t play with their friends. FFXIV had caps on some servers for ages. Was gona stop playing as I couldn’t play with friends and I wasn’t going to ask them to abandon 1000s of hours worth of stuff just to play with me. I was fortunate that I apparently hit a bug when their servers were overloaded and managed to make a character on the server anyway.
You’d also have to clear out old toons, otherwise you’d have servers that are capped but have few people playing. Then when those old people come back 2-3 years later, just find that they’re been booted off the server they were on and might not be able to play with old friends that might of been more active. Then you’d have complaints that people can’t play with the friends they’ve already made because they’ve been booted off the server. Then people complain Blizzard doesn’t care, they’ve been removed from their friends.
Unless you allow people to be able to transfer back to servers but then you’d still have the issue of the older servers being way too big. Out of the MMO I’ve played (WoW, FFXIV, GW2 and PS2) they all suffer from lag given a large enough amount of people. GW2 tends to happen in the 50-60+ range, PS2 had issues in the 60+ range. I had issues with FFXIV when the expac first dropped, and thats another sub-based MMO where you had 2-3 hour ques. Its never good, but WoW isn’t the only one that has really long ques on big servers when a patch drops
No solution is foolproof, they’ll all have problems.