could anyone explain to me why there is a player max. If they are using the same server as in eve why cant we see a battles that are in the 1000's or atleast 500.

The reason RAM exists is because it allows the system to store smaller amounts of data in a location where it can be accessed MUCH faster than through other methods.

Virtual Memory is where a "swapfile" is created on the hard Drive, and data is quickly swapped (hence the name) between this file and the RAM, effectively increasing the amount of RAM available without needing a physical upgrade.

Cloud services are totally irrelevant to either of these things, so no, Sony buying Gaikai isn't going to give the PS3 a RAM upgrade. But you're thinking along the right lines - there have been a few PS3 games that created swapfiles. Although some of them do so VERY badly, and instead of having a fixed allocation of space, they gradually eat your HDD the longer you play.

The limiting issue with the PS3 has always been RAM. Yes, MAG had 128 v. 128 players but they did that by controlling a few things:
1) they limited the number of weapons, armor, vehicles, etc. and generally any personalization that would have required additional memory to be utilized
2) they strongly controlled the rendering of any objects that are seen on the screen at any time.

Zipper, the makers of MAG claimed that their engine could allow for more than 256 players in a game at a time but nobody ever saw that.

Some of the things that MAG players asked for a lot but were always told that the limits of the PS3 did not allow for it were female character bodies or heads and various minor personalizations. They were constantly told that the memory was just not there for it. One other request was to have a game mode with three different teams playing against each other. They got this game mode but it was 16 v 16 v 16 and were told that the game mode could not handle any more players than that, again, because of memory.

Let's be clear here (because I have seen the mistakes in talking about this issue) the problem is not with the maps or their size.... or the number of maps for that matter. The problem is with personalizations. When the game starts, all the information for every gun, armor, equipment, body type, head type etc. that CAN be in the game (notice I say "can be in the game" and not "IS" in the game) needs to get loaded into memory along with map information and it all has to fit into the skimpy amount of RAM memory that the PS3 has.

It seems to me that when I am running around in DUST I run into moments where there is a swap done to give me more map. If this is the case then CCP is not loading in the entire map into memory. This might be because they are over-rendering the map (which they should change/improve) or because they are trying to preserve memory in the hopes that they will be able to give us more players in a battle. The flip side of all of this is that they have already run into memory problems and won't be able to give us anything more than they already have.