From the patch notes:

* Flying over Dalaran and Wintergrasp is now possible so long as players keep a healthy distance above the ground.

Also, the reason you get the instance error message is simple. They have a hardcoded limit on the number of instances that can be launched at a time. They've said numerous times that they are working on it, but it will require substantial hardware upgrades. Its not as simple for them to upgrade their servers as it is for you to add a new stick of ram to your PC. They are already running some of the most powerful hardware in the world.

As to why it's actually getting worse after the patch: there are *way* more people running heroics than normal, because of the new emblem drops. There are also *way* more people than normal playing period, because a brand new patch just dropped. Both of these things lead to the hardcoded cap being reached more frequently, which unfortunately leads to more error messages.

I agree the instance limit is annoying, however without going into an argument over whether or not the problem should exist, I'd rather be locked out than face the buggy, drop out/DC instances of the old days.

Thanks for the info on Wintergrasp - I really should read the patch notes more thoroughly...

I agree with you, Hivetyrant, that it's preferable to the bugginess in TBC/Vanilla - I guess I hoped they would have instituted some changes by this patch that might have helped with it - if nothing else, perhaps some free transfers to shift server sizes around. If only wishing made it so.