"It's actually not instances. What we do is we have different world states, and depending on what quests you've completed, it changes what world state you're seeing. It's also broken up between Horde and Alliance... because until you finish that quest, we don't really want the Horde and Alliance conflict muddying what's going on. The Lich King doesn't care for PVP."

Right, so I'm going to be placed in completely different state of the world and all my friends are in some other state that makes it impossible for them to interact with me? And I need to grind a bunch of quests to get to them?

I hope this isn't used too extensively, because it makes playing with friends really hard unless you follow their progression curve closely. Can anyone in Beta explain how this really works and how extensively this is used?