Arcades, I think you're giving an oversimple answer to MOSQ's post.
A large squad with a variety of people will have different interests or hot buttons for players, but the cameraderie is what makes the squad. Some members are infrequent flyers, but are still vox and virtual buddys when they do show up. Many squads have a loose structure and no real squad night, they just show up and sometimes do things together, and other times those with similar interests work together, such as gvs or fighters only or bombers. They still communicate but are not always at the same place creating a horde.
The arena limits limit the ability of those folks to 'hang around' together. Tonight was an example, since LWI was full and LWII had about 10-15 people. In LW you can still do anything, fly anything, gv, have cvs, etc. If they can't get in LWI and the other arenas are populated lightly (12 or 30 players), or the other arena doesn't appeal to the player as a lone wolf, the player either does something they don't enjoy as much in a lightly populated arena, or logs off.
The social aspect of loose squads that aren't single minded (i.e. only fly X planes, only fly X historical planes, only fly X country, only gv, only grab land, only fly fighters, etc.) has deteriorated significantly. Either they have to form new or less virtual friendships or squads based on single-minded interests, get used to flying individually, become a rigid squad with attendance rules and procedures or not play as much, or enjoy it as much.
I don't have any heartburn about the different arenas. I think that players in non-peak US time and loosely organized, more socially-centered squads are affected the most by this change. HTC seems aware of it and I trust they're trying to figure out ways to remedy it.