I think the heavy instancing and 32 player limit truly is the weakest part of the games design, FD seems to have (here comes the dreaded 'i' word) immersion as one of their design goals, yet the instancing fragments everything in the universe. Obviously they felt that this is the best route to take but surely this will hurt gameplay consistency.
For example, imagine tracking a target, another player perhaps. Maybe he engages his super-cruise drive and shoots of to another area of the solar system. Does he just pop out of my instance and into another one? What if the other instance he travels too has 31 players, and he is the 32nd? Where does that leave the guy who is trying to follow him? Very confusing stuff and I'm not sure how it's all going to work, but I am interested to see how they tackle it.
You need to remember that this not an MMO in the current accepted sense of WoW or ESO or STO or Guild Wars 1/2. Elite: Dangerous needs to be able to be played as both a single player and multiplayer game which sort of enforces the lack of any kind of client/server structure that would allow the kind of instance player population those games can indulge in.
The current premis they're working on is that with a peer-to-peer multiplayer set up that is required for working as both a single and multi player game is dictated by the overall bandwidth available into the internet and ping rate any single player's connection will be able to support. these figures are going back to the 90's and the original multiplayer FPS's such as Quake, the first Call of Duty and similar. That limit they're currently working to is 32 combined peer-to-peer connections as a realistic maximum: figures that work well over average, for the late '90s, dial-up connection in to the interwebs.
No doubt FD's working figures will increase past 32 as they get more network useage data from the Alpha backers and start streamlining the peer-to-peer networking code. One thing is for certain though is that instance player populations in ED will never get into the hundreds for the simple design decision above. And also why ED is not an MMO.