I'm sure that's exactly how it'll work, I mean, it's not like there's overcrowding issues in CRZ in other aspects.
This is not a quest. You seem to not really understand the purpose of this new feature, and what they want from it.
To break it down further...
No Invites = Hundreds of people stuff themselves into the Brawlers Guild to attempt to take part. That many players + small area = not good, as Blizzard learned many times before (The whole Argent Tournament was moved to Icecrown because of design issues caused by Dalaran, which caused the entire zone of Crystalsong to become pretty much worthless).
Invites but limited to server = A dozen people standing around, no real audiance, barely anyone to get excited about the fights. That few players + not phased = Whats the point?
Invites plus CRZ = Area scaled to hold amount of people they want to be taking part and watching the events, some will have invites, some will not, but people will be watching at the level they want, without the server themselves crashing in due to limits of invites.
Not sure why this is hard to understand.
P.S. Here, might be better to just let Blizzard explain it.
We've seen some confusion about people from other realms showing up in the Brawler's Guild.
It's important to note that the Brawler's Guild only uses realm coalescing when the number of participants is really low, so a lot of people are seeing people from other realms due to the fact that there haven't been many invitations to join distributed yet. It's highly likely the area will cease to activate CRZ on most realms as participation increases. Having 100+ people in the queue doesn't create a good experience, but, from our perspective, neither does having only a small handful of people.
The feature is designed to bring a decent population into the guild, and those people should spend at least a modest amount of time as spectators or loiterers before getting into the ring. We didn't design the Brawler's Guild with the intention of getting you through queues in 10 minutes or less. We're not trying to replicate Dungeon Finder for the solo player with Brawler's Guild.
If the place seems overcrowded AND you're seeing people from other realms there, it could be a situation where the population check that determines whether or not to coalesce a realm hasn't run again yet. As I said before, this should stabilize in time and likely automatically disable CRZ for the guild.