Yes and no.
More players = less FPS.
But you are forgetting that in Heroic and Mythic each time there are more boss skills and sometimes more adds added which increase the load on the CPU even more.
LFR is basically less demanding than a 5man mythic + pull… many afk and pressing one button per minute.
Compare that to 30man guild raid or even mythic where everyone is using every global cd and increasing the load exponentially when all the addons and weakauras have to calculate the interactions.
That is why on pull with bloodlust and all cds your FPS will take a big hit, then go up again.
Also when there are lots of adds, the FPS will go down when people are aoeing.
There are far less people at the events now than in the first weeks after launch.
At launch there sometimes where several full raids (40man) in the same sharding.
Now alot of players have either quit the game (like every expansion) or don’t need the items and reputation from the rares/events anymore.
If you are CPU limited, which you are in extreme situations like raids and world events, then it does not matter whether you crank up the settings if your GPU can generally handle it.
My GPU usage in the open world is mostly near 100% (capped FPS at 141 because of gsync) and in raids it drops to like 30-50% or less.
The only settings that really hit the CPU hard is the viewing distance and environmental detail because they increase the amount of drawcalls on the CPU.
You can test this in Valdrakken for example.
I’m playing on mostly 7 in the open world with my 5800X3D and a 2070S in 1440P/144Hz.
Most of the time i get my 140ish FPS.
In a raid like the current one, which is inside with a short draw distance, the settings don’t really matter unless you are playing on a very weak system.
I mean even with a 1050TI in 1440P you will be CPU-limited there.
For raytraced shadows to make sense, you would probably need a 3070.
Yes, but WoW is not one of these games.
WoW feels like playing in slow motion when dropping below 50ish FPS.
You can literally see your GCD slow down on the action bar 
It has a direct impact on how your class feels especially if it has a fast paced rotation and many instants, like BM hunter.
That also means your DPS will decrease to a certain point, not much, but it will.
Even more so when dropping below 30 and less.
Correct. Though for me being used to higher refreshrates than 60, 60 feels bad.
I know this isn’t everyone but for me it does not feel enjoyable.
With my old Ryzen 3900X and 30ish FPS in raids with drops to 15 at Sylvanas mythic when the motes affix activates and everyone was aoeing that took the joy out of playing.
So i decided to upgrade for DF and got the 5800X3D, best CPU i ever bought.
Literally doubled my FPS in Oribos and raids back then, it’s insane what the extra CPU-Cache does in WoW.
To be honest, i don’t really care that much anymore.
Been here in the forums for ages, had this every expansion.
Back then people with FX 4100 CPUs where claiming they had 100+ FPS in a raid… insanity 
I mean, if they are happy with their FPS, good for them i guess.