Planetside2 handles larger battles fairly well, there's a little latency wonkiness, but usually not too bad, much better than when it released.Typically, the threshold for concurrency to be considered "massively" has to be somewhere between 101 and over 1000 players, in the same area, concurrently. Anything less is in the realm of FPS/RTS/Co-op games hosted adhoc on anyones computer, anywhere.
Of course, over the years, getting more than 200 humanoid models (player or NPC) in the same visual field has proven challenging. The best I've seen is Warhammer Online, with 100 vs. 100 in city battles. They tried 200 vs. 200, but the servers couldn't handle the load. The clients rendered it fine, but the servers couldn't handle it.
In other games, teleport storms, selective rendering, distance culling, auto-ghosting, quality-by-distance.. a bunch of techniques have been used to try to work around the fundamental problem of handling so many network + rendering tasks. Typically, most games now just spawn new shared instances when more than a threshold is reached, because no-one wants to solve the root problem elegantly.
Lineage2 also had I think up to 500v500 castle raids, though, again, those were 'roll dice behind the scenes' combat mechanics.
So, to say that more than 32 players in an instance of ED is impossible is just not true. Maybe 'not possible given design/server constraints that FD is working with' is accurate, or maybe it's not. Maybe they're just not interested in larger battles.
After playing EVE Online, I can say, without a doubt, those huge multiple hundred (or thousand) ship & drone fleet engagements are pretty fun the first couple times, just for novelties sake...but after that, they're horridly boring. Anyone targetted in full by the fleet in anything less than the largest ships is irrevokably doomed. They're just slugfest battles of attrition which usually have huge logistical lead-in times while fleets organize, and then a ton of visual clutter for an hour or so while a hundred ships gets alpha-striked into oblivion until one side gives up...
I'd like the option to have larger battles and more dynamic player interaction in Elite...but I'm fine with never having the huge multi-hundred player battles.