That means the satellites should be aware of each other positions, just like aircrafts. It’d take care of collision. The majority of satellites will be commercial, not military. There will be space control for them.

Also may be not 500 billions, but how about 100 millions? So 5000 times fewer.

Aren't they traveling much slower versus their orbital plane - basically how much drag they experience?

For example, we travel 1600kmph due to the Earth's rotation.

That's much better than cars doing 80mph a few feet apart on the freeway.

We could not do that inadvertently. To block even 1% of light using Starlink sized satellites (~30 m^2 with solar panels deployed) would require tens of billions of satellites. We could do it on purpose with huge rotating solar reflectors, and it should honestly be considered as a real option, but we couldn't and wouldn't do so just by launching communication satellites.