There was enough space for everyone (certainly after Kunark if not at classic), the issue was more of people wanting to camp specific items, but needing a group to do it, and a group wasn't always available, and when they were they were full or they didn't want your class.
To clarify, it wasn't usually a 'specific item', but just a place for exp.
So there were limited dungeons, with specific camp spots.
For example, in the basement of highkeep, the camps were divided into the upper room and two lower rooms - but battles erupted when one group was strong enough to kill all the spawns in both lower rooms, and wanted to claim ownership of them, while a second group wanted to claim a room. A battle between 'ya you CAN do it' with 'but people want exp, so share'. (Then there was the mod wandering between the two rooms up for grabs).
There weren't that many decent exp spots, leading to the long wait lists I mentioned.
You COULD always go find an open area, but usually get a lot less reward.
Sol B was one of the highest 'list' spots along with Highkeep for exp groups, but another classic - but this one was also about item camps along with exp - was lower Guk.
Other dungeons were more about taking a group through it on an adventure instead of camping a spot - places like the lava zone dungeon (usually) and Sol A and upper Guk.
Those things are issues, yes, but to totally remove those issues waters down the game and makes it too easy/not enough risk/not enough prestige for completing and accomplishing things. I've not actually played any MMORPGs other than EQ1 and SWTOR and briefly Rift...while greatly different, all 3 of those are still level-based and whatnot. How well do non-level MMORPGs work? Which I ask since EQN is going that route...
Another prediction I had during vanilla EQ but one that hasn't happened is that some MMO's might go level-free.
The reason I predicted it is how expensive it is to make zones for level 10-15, 15-20, 20-25 that went unused after a brief visit, and how crowded the end game got anyway - so why not forget levels, which also kept players from playing with each other if different levels, and put the resources into a LOT of content for everyone, and replace the 'grinding' of levels with grinding of raid bosses, faction, gear upgrades?
I suspected that character leveling might come to be viewed as an outdated anachronism of earlier games and not cost-effective for developers.
While that hasn't exactly happened, Rift has almost done that by letting people change their levels to play any content and get rewards.