I read Carlo Rovelli's book The Order of Time about time, relativity, etc. One of the striking things - that I couldn't fully follow, frankly - was something along the lines of there's a limited cone of spacetime for which you can even tell what relative order things happen in. That there's not a valid concept of "simultaneity" for places far, far, far apart due to speed of light, time dilation, whatnot.

So: just design a game where your players are so far apart that the speed of light is the mechanism that guarantees no interactions between some players. ;)

But more relevantly, this seems to be one of those problems that's been hampered by the slowing of single-core performance. Though disk and memory and network keep getting faster, so I wonder what the absolute limit if a game really focused on processing single state globally above all else would be. Maybe even at high bandwidth the latency to thousands of players wouldn't be good enough to get all the updates out?