No.
I really don't know how you don't see it.
More people means more LFMs will pop up and it will be easier to find a group that is in your level range / doing the quests that you want to do.
We can even look at the extremes if you'd like.
Let's say you have like 10% of the current population, so extremely low, there will be literally almost no LFMs and odds are that nobody is in your level range. So almost no grouping at all.
Now say you have 1000% of the current population, you will have a much healthier LFM panel, multiple groups per level and groups will fill, and new groups will pop up more quickly. Thus, more grouping.
How can I make this more clear?