What’s even cooler here is I feel we have the opportunity to have neighboring villages: I’m a villager in my instance, you’re a villager in your instance, and civility and understanding is promoted because we are in a real sense representatives of our respective villages. We don’t want to make our villages look bad.

Such a nice point! You gave me something to think about now :) In a way, while you are still anonymous, the instance gives you an outside identity. You don't have to remember the username to "know someone from the village" in a way the author describes it, the instance kinda already gives you this.