Another thing to consider, is how detailed the characters will be. The more each character can have different textures added to it, the more memory it will use up. Different models, if each player has their own unique model, that also adds to the memory usage. If all players use the same base model, and they pretty much gain the same gear or have maybe 2 or 3 different sets, then the more you can add to one area/zone.
It can depend on how much detail is in the zone itself, the more models and textures there, the more memory usage. Terrain could have lots of detail or it could have a snowfield. Add in houses, trees, roads, huge mountains, and the number also goes down.
Yes, anyone can put 1200 duplicate models in a pretty empty zone. But add in some details, and that number starts to go down.