3. some games may use the game dev's servers like BHD, which has up to 50 players on one map, but I think since the 360 will be more powerfull, every online game will share the game being played, or every 360 will have a copy of the game running and the only info being transferred will be the players positions, actions, environmental things(fusion cores exploding, etc.), etc. that should haelp to reduce lag, but if you have a bad connectin it will still lag for you.