Why cannot we have 16 players?
Because the mechanics of the game are created only for 8 players. Why not transfer them to 16 players? Because it is labor intensive and no one needs it, besides, the developer will not earn more money on it.
8 players war loot isn’t good enough ? 
It would make classes like Barbs or Summoner even more useless, than they are already now
It would only make sense if you add private loot in a way that the p1 loot experience would be the level of 8 players and for a p 16 mode, monsters could get 50% more dmg and 300% life (for example). so people would need to play together to get the best loot experience. If you play Singleplayer, then every Char except High end Sorcs or Paladins are Fun Chars, because its extreme hard to beat P8 with the other classes.