It is incredibly difficult to manage large towns. Southern Valyria for example has been through 4 owners in the past several months for this reason. I don't think it would be possible for all these players to go into a couple towns. Players wouldn't want to get rid of their towns and also the towns would become to big to effectively manage.If you cap towns in an alliance, all the players will just collapse into however many towns can be in an alliance and literally nothing will change other than you would actually restrict players' freedom to create their own towns how they like. Further, any player exclusions that would result from this would cause them to likely leave as they're preventing from having fun "doing the big fights with the big towns".
Unfortunately, any caps on town/alliance sizing is regrettably a poor idea and quite the opposite, would harm growth on the server. We know this to be true as we've tried variations on this theme over Loka's 10 years.
It is 10 times easier to have 20 small towns rather than 3-5 large ones.
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