With spatial I mean that the players have a position in the game world, like x,y,z coordinates.
Most games solve it by dividing the world into shard/instances/zones. The article mentions this and the issues you get.
There are no game that I am aware of that is able to handle 1000+ connected players (1) nearby like in the "wall of copycats" in the article. Most games have a limit of around 100 players on a beefy server.
It's also about he level of trust you are willing to give the clients, you can for example offload all logic to the clients and just have the server broadcast all messages. But then you will have a problem with cheaters that use modified clients.
The same "holy grail" exist in database too, where you want low latency, high throughput/concurrency, and high availability. Where the solution is, just like in "MMO" games, to use "sharding".
1) Battle of B-R5RB in Eve online had 2,670 players on the same shard according to WikiPedia. Their solution to the problem was/is to lower the game physics tick-rate.
What do you mean by holy grail? Is it not something that's already accomplished by several games/MMOs?
Unless "spatial MMO" means something specific here.