If everyone has to be able to speak to everyone else, then everyone has to be on the same server. Otherwise this won't work.
And as far as I know the server does also not have any load-balancing capabilities in general.
Note however that I know of e.g. EVE Online servers that are serving >1000 users at the same time without problems. So the server can handle it without issues. You need a hardware that is powerful enough (and most importantly: has the necessary bandwidth connection) though.
EDIT: Virtual servers is for running multiple server instances fro