One MMO I played (Aion) was so bad at this that a prerequisite for open-world group PvP was to go into the settings and adjust the 'number of other players to render' slider down to 1. The fact that the game had a setting for this demonstrates that the developers had already resigned themselves to the fact that their engine couldn't actually handle high player counts. Under normal circumstances stuff was fine but once you had 1-2 dozen players running around, not so much.
In practice it wasn't utterly horrible to play this way, it was just very surreal to be running around engaging in combat with name-plates floating in the void.
This is standard though. You either suffer unplayable performance or you have a setting like that (eg Lineage 2 suffered from this - what many consider the predecessor to Aion). The main problem usually is the number of draw calls. Due to the customizability of players every player character is likely to have multiple draw calls. You can't batch them well either, because few of the players will likely have the same things on. This essentially means that every player is quite expensive to render. Hopefully dx12 and vulkan will improve this, because it should now be possible to do draw calls from multiple threads.
There are good solutions for combining multiple faraway players into one draw call. You first lod them and then copy them into the same vertex buffer using a compute shader. Afterwards, you can render something like 8 reduced poly players with the same performance as one full-poly player.
But, that method is difficult to get right in Unreal Engine and impossible to do with Unity. That's why you only see it in high end titles like Battlefield but not in any indie MMORPG.
In practice it wasn't utterly horrible to play this way, it was just very surreal to be running around engaging in combat with name-plates floating in the void.