You generally want good performing (not VPS or "cloud" instances) but you can run a bunch of different worlds and have people with cross server talk, the ability to warp between worlds, etc. Most of the larger networks and nearly all of the smaller networks use a variation of this kind of model.
* https://www.spigotmc.org/wiki/bungeecord/ - Older, less-performant but still used by some teams
* https://papermc.io/software/velocity - Newer, more performant, maintained by the team that makes Paper, one of the leading performance MC server implementations.
For context of scale btw, when Hypixel had 200k+ players online at peak we had something like 2,000+ 1U E3-1271v3's each with 32GB RAM, all colo'd in a single DC in Chicago. Egress is 70-80gbps or so 95th percentile, with most months (at high peak) egressing 10PB/mo+ of real-time, uncacheable data.
I thoroughly enjoyed creating different game modes, similar to Hypixel. Whenever I would play on Hypixel I’d think about how the games had been implemented.
Seeing this thread brings back a lot of nostalgia. Reading through these comments makes me realise that a lot more work went into these servers than I had ever imagined. Naive me thinking it was just a bunch of spigot servers with bungeecord thrown on top.
I’d love to revisit and get back into it all. Alas, I’m stuck working on software nowadays instead.