Data is only read from the database (disk) when they are first loaded, after that they are stored in memory which is a lot faster. High end servers can have terrabytes of memory, although that is usually not necessary. The world is split into many smaller area that are processed by smaller servers. When a character moves from one area to another, the data is transferred to another server handling that area. There are processes that run in the background to update data back into the database to make sure not too much data is lost if a server crashes. In fact there are databases which handles this in memory and disk data storing under the hood and the developer does not need to care about it.
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