You know what's odd? Since we could have 12 character slots I finally made a couple of characters outside of DC, figuring that it no longer mattered in One Tamriel and it might be fun to hang with some PvP frenemies from time to time doing Cyrodiil fishing or the like in their alliance.
I went to cities and noticed that in places where EP or AD population was super-higher the performance was, of course, poor. But then going to the same place on a DC character where no one really hung out the performance was... exactly the same.
This made me think that perhaps the instancing worked per sub-zone.
Then One Tamriel comes along and weirdly the performance isn't worse thus far isn't actually worse and I think it's because we were, by and large, already in the same instances, just invisible to one another. Then overflow instances were used as needed (although to save money the pop cap on subzones was set way, way too high).
Now the thing I worry about isn't performance but where to hang out where there's not a bajillion idiots spamming chat and shards everywhere.