The age of the game is irrelevant when talking about the server capacity. It's not like they are using 10 year old servers.
I won't pretend to know how these things work, but I'm going to assume that good servers don't necessarily allow a huge amount of people in one area. It comes down to the actual game, which is pretty old now.
WoW has always crashed when you get a huge amount of people in one area, all the way from Vanilla to modern times.
I never saw it crash during massive city raids.
Slow down like hell sure, but jot crash.
However, I can see where it would. If the game can't handle all the simultaneous requests for effects, player status updates, or input, it might crash with some kind of request overflow.
I remember when a Stormwind raid caused a server crash in Vanilla, probably had around 120 involved at the most. I've also heard of gatherings of 150-200 players causing crashes. There's a funeral crash video ("WoW funeral raid" brings it up on Youtube) that took place in Vanilla, in the middle of a quiet zone. I'd say there's 60-80 people there and there's some serious lag when the combat starts. That's all from Vanilla, but I doubt the game has changed significantly.
In any case, I've seen what modern MMOs (GW2) have been able to do with heaps of players fighting each other in big areas. TESO shouldn't have any issues doing it, given the size of the developer behind it.