pierrot wrote:PSO is an RPG. It's predicated on internet based multi-player that at times has more than 20 player characters from all over the world, roaming around, and interacting with each other. It's an MMORPG.
Setting aside that "more than 20" is paltry compared to the hundreds or thousands of players typically on individual MMO servers...
The key difference is persistent online areas versus what are often termed instances.
If I'm playing Guild Wars, and step outside of a town, a new copy of the combat area I've entered is created just for me (and whoever might be in my party) to occupy. When I zone back into town, poof, it's gone.
Practically speaking, the same thing happens with Battlefield, or LoL, or Diablo III, and so on. You might have 20 people playing together, but you're exclusively playing in your own copy of that game content that ceases to be once it's not being used.
An MMO has a persistent world. You step outside of town in FFXI, and you enter a zone that's there and running whether there are zero people in it or hundreds. It's not your own special little copy of that zone, it's the same one everyone else on that server will be a part of if that's where they are in the game world.
Practically speaking, instances are often preferable - MMOs tend to still use them in limited amounts to ensure that players have equal access to certain things, to restrict access to content, and so on.
In a persistent world, you may have players trying to do the same content, which can create competition for in-game resources...though it can also result in teamwork or other assistance too. For better or worse, it creates a different dynamic.