The issue is not graphics its data on the server. The client handles all the graphics. The server just tells the client the location of things and what is going on and keeps a data base. There issue is purely that the server can not track/process and or send/receive packets fast enough. This is the same reason why we have 5 piece instead of 10 piece armors because the server needs to communicate each piece to the clients of all the players that that armored player is visible to as. Also the reason why pop in is so close up, you can see how the pop in is much worse when the server is lagging and you have to walk up and wait a while before the server has enough time to send you those packets on that player.
If the reason for the poor performance was graphics then you would have client crashes among some players at times but not all players because of the GPU differences amount players. Or the frames would drop but they are staying constant. The only time the game would lag like this if it was client would be due to having too many entities in the world to process but thats a CPU issues and not a graphics one.
You can look at the last large battle of the beta where it was 200 v 200 or something and everything was fine until all the players took weapons out and then there animations stopped working but frames remained relatively fine. The system they had server side just couldn't process and put out the packets fast enough to tell peoples clients the animations of the other players. Probably because there are more packets associated with the animations for combats compared to just running around weapons away.
The issue is not players on screen it is the ability of the server to process the data fast enough or and the ability to disseminate packets to the players fast enough. You would not even have to be near that fight or even see those players to sill feel lag. As we folk in GK can attest that we would get major lag with the rest of the server despite seeing no one nor our node being populated that much.
Regional servers would fix this issues and its why they are making a temporary extra myrland(s). The issue tho is even with a NA and EU server AUS, SA, NA, OCE would play on the NA server for lower ping and even tho this will be contested NA has slightly more players then EU. The NA server would be populated just fine while the EU would have less pop. As most players would want to be on the more populated server so you would see like as examples in many other games, EU players playing on NA instead causing more even less pop on the EU server. This could cause a cascading affect on the EU server.
Naturally NA east is the most centralized location to have a server and could have a better affect on the over all games gameplay as you would no longer have outragously high ping for some region while most of the players would have moderate ping under 120. I think the reason they have the server in EU was because new EU players would shy away from the game more then NA players would shy away if they had over 50 ping. And ping defiantly matters in this game.
