Not played WoW, but from what you're saying you're talking about instanced dungeons here, yes? Not the same thing as what I'm talking about. Sessions = instances in E: D.
No, I'm talking about the entire game.
Nothing anywhere persists. No. Thing... Kill a million orcs in the open world, five minutes later they're all back as if nothing happened.
You're pulling away from your original point about the persistence of dropped items anyway. There is no persistence of dropped items in WoW because
you can't drop items anywhere. To transfer items you need to use the trade interface (or hack it by sticking them in a body, but see above: five minutes later it's gone... that's not persistence).
By your own definition, the most successful (I believe) MMO of all time... isn't an MMO! Neither are many other MMOs out there.
Except you don't see anyone that is not in your instance. At all. At most, you are playing with 32 people (including yourself) at any given time. Even in the "All Player" group, it is not massive.
Again, many other MMOs implement this kind of behaviour, even in their open worlds (not just in "instances"). They'll use overflow instances, or queues... because even having hundreds (never mind thousands) of players in the same place just makes their servers fall over and die.
The only one I can think of that doesn't is EvE, and... well, good luck having twitch based combat in EvE that's all I can say.
Edit: actually, thinking on, I think even EvE limits the amount of players in a given area. It numbers in the thousands, but there's still a limit.