If I read the documentation, it appears to be that it will expand the region to accommodate both players or merge the regions, so that you will never have a situation where two players from different regions are visible to each other.
I guess that makes sense.
I wonder what this looks like on practice, what kinds of play styles will see the biggest boost from this.
I also wonder how this plays with things like hyper long range TNT/Ender pearl cannons. Entities are their own pile of worms, but distant regions can suddenly influence each other in some cases.
Would be outstanding to see a server with something like 4000 players online all on the same map.
Imagine being able to moderate lag machines on a per region basis, it would make it so much easier to track problem players.