I think instancing goes hand in hand with a lot of other "simplifications" to the genre. The complex character advancement in EQ and Vanguard are great for old school PnP players and hardcore RPG fans - but you can't get wide market access that way. WoW is popular largely because the character advancement is so narrow. They emphasized gear progression (while simplifying it to tiers), the skill trees boiled down to 1 or 2 viable specs per class, and most of the skills never saw use. No deciding what spells to memorize, no right-clicky item spells. At the top tier of WoW PvP it became easy to predict the course of the fight within a few seconds because every class had a cookie cutter chain of attacks. Top-tier raiding was DDR style "don't stand in the fire" mechanics.
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