1. Bandwidth requirements scale quadratically with player count, since the state of each player needs to be broadcast to every player. You can optimize this with clever tricks like server-side occlusion culling, but that's heavily dependent on your specific game's mechanics, and it still doesn't address the worst case scenario of lots of players clustering in a small visible area.
2. Players are not the only entity that need to be synced. Every server-side entity affecting a client needs to have its state broadcast to that client. A dynamically destructible environment that physically interacts with players is a perfect example of this - launch a rocket at a building, compute the Voronoi fractures server-side based on impact location, sync thousands of pieces of flying concrete debris (each with its own rigid body) across all players.