Direct answer
A concentrated crowd increases nearby entity AI, interactions, packet updates, inventories and plugin events in a small area. The symptom is different from terrain generation or chunk loading.
How to check it
- Record MSPT and run spark while players gather at spawn, a trading hall or an event platform.
- Compare with similar player counts spread across already-generated locations.
- Check whether a nearby farm, item entity pile, scoreboard or plugin listener dominates the profiler sample.
What to change
- Move especially costly farms and player events apart where practical, rather than changing chunk settings without evidence.
- Reduce unnecessary nearby entities, rapid item movement or heavy repeating plugin actions exposed by the profile.
- If Folia is involved, examine region-level scheduling: players in the same region do not automatically gain more parallel tick throughput.
Software and version notes
Compatibility and safety
This is a workload concentration problem, not a limit of one Minecraft chunk as a unit. Paper and Folia use different thread models; avoid claiming that each player gets a separate thread.
Verify the result
Repeat the same event with players concentrated and spread out. Compare per-region responsiveness, MSPT, player-visible stutter and profiler hotspots.