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In practice, for most classical RPGs you can get away with simulating each of your PCs and NPCs as a box (parallelepiped), or as prism (say, hexagonal or octagonal one)

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Mathematically speaking, without Interest Management, the amount of data on our servers will need to send (to all players combined), is O(N^2). Interest Management reduces this number to O(N)

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For fast-paced games, there is one big problem with the flow shown on this diagram, and the name of the problem is “latency” (a.k.a. 'input lag')

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No, better bandwidth doesn't necessarily mean better latency

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[about Round-Robin DNS] one of these returned IPs can get cached by a Big Fat DNS server, and then get distributed to many thousands of clients

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As a rule of thumb, Front-End Servers are a Good Thing™

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If you disrupt the game-event-currently-in-progress for more than 0.5-2 minutes, for almost-any synchronous multi-player game you won't be able to get the same players back, and will need to rollback the game event anyway.

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However, keep in mind, that all fall-tolerant solutions are complicated, costly, and for the games realm I generally consider them as an over-engineering (even by my standards).