Layering is more or less Sharding, the former is realm-wide while the latter is zone-wide which already happens now.
The thing is often players forget with pink-shaded glasses is that in the far past, Vanilla or so, there was no such thing as sharding/layering. The realms really went down often or needed a lot of maintenance.
Zones were overload quite often and quest mobs were camped on the spot by 4 or more players at once, much akin to launch. With sharding technology this is alleviated greatly, but it has downsides. Like players who suddenly get sharded elsewhere, while they were grouped or not.
It is explained in more detail here why it happens and so on:
And it isn’t so that Living Flame was introduced as a “mega server” or biggest server cap by Blizzard, but more or less that players themselves designated it as the Number 1 server before launch and swamped it. So Blizzard decided to increase cap and also increase layers.
Think of sharding like adding temp floors to an existing building. The building capacity itself doesn’t increase.
There are plenty of entirely same, viable and populated realms that could’ve been the “Living Flame, Mega Server, Locked make a post about it” thread which happens occasionally when they get (faction) locked.