World of Warcraft already supports raids, dungeons, and arena battles with players on other servers, and the next patch will take another big step to combat dwindling populations. 5.4 will introduce Connected Realms, linking--but not formally merging--certain underpopulated servers so people can do everything together.
Players on linked servers will see each other running around the same world, quest together, shop in the same auction house, fight each other in Battlegrounds, and so on. They'll always be marked as from their home server, though.
Why not simply merge servers, like so many other MMOs have? "Connected Realms also allow us to link populations in a way that's not disruptive to players, and that doesn't negatively impact players' sense of identity and character," Blizzard explained in a blog post yesterday.
"Other alternatives such as merging realms would require us to force character name changes if there were conflicts, and could lead to confusion for returning players who'd log in to find their realm missing from the realm list. Some players also feel strong ties to their realm's name or history, and we don't want to erase that."
All servers linked will be of the same type--PvE, PvP or RP--but Blizzard hasn't yet decided which realms will be connected, how many will be in each group, and so on. The developer expects to launch Connected Realms some time after patch 5.4 launches.