Hi ,
The number of players in one scene hits the nail on the head. A game isn’t an MMO just because it can group 8 or 16 or 32 players together in one instance; the first M, “massively”, means that players can interact at the same time on a much larger scale, whether portions of the game are instanced or not.
For example, one popular game type today is the MOBA, short for “Multiplayer Online Battle Arena”. The two most popular MOBAs, Dota 2 and League of Legends, each have millions of players online at the same time during peak hours. Millions are on line, and yet the games are not known as MMOBAs (adding the “massively” abbreviation) – they are simply MOBAs, because each game takes place in an instance with a limited number of players.
Here’s another definition, ripped from an Examiner article](http://www.examiner.com/article/mmo-101-what-makes-a-game-massively-multiplayer) on the subject:
So while a gray area certainly exists, there is definitely a distinction to be made between MOGs and MMOGs.
Cheers,
-D