Scott Bilas worked on Dungeon Siege and wrote a paper, "The Continuous World of Dungeon Siege". While Dungeon Siege is not a MMO, it does have a world, and he talks about player positioning in his paper. I found it to be a great read. Here is the relevant section:
The Precision Issue
From the beginning, the engineering team knew that the continuous world was going to significantly affect the engine and content design, and the core issue was numerical stability. Imagine two characters walking in formation two meters apart heading east away from the origin. At some point, the distance from each other is overwhelmed by the distance from the origin, and the characters will appear to be “at the same location”.
With floating point, the further you get from the origin, the more precision you lose, which can cause all manner of nasty problems. Things don’t sort right, cracks appear between adjacent meshes, space starts to quantize, and cats and dogs start living together. Dungeon Siege uses the FPU in single precision mode for the obvious performance benefits, and to match the native precision of the video hardware. However, even if we increased the precision, it ultimately could never solve the problem because the world was planned to be, and ended up, incredibly large.
The precision problem meant it would not be possible to have a unified world coordinate space like most other games. Instead, the solution was to segment the continuous world into a set of independent coordinate spaces, and switch among them periodically to reset the precision. A variety of ideas were tried out within these constraints, and we eventually settled on a variation of a standard portal system.
Our solution consists of a relational node-based coordinate system, in which each chunk of geometry (Siege Node) has its own coordinate space, and is linked spatially to neighboring geometry via the doors it shares in common with those neighbors. The arrangement of nodes connected by doors forms a continuous graph that represents the entire world map. This node system evolved over time from its original goal of maintaining FPU precision to become the primary method of efficiently subdividing space, and the root of countless optimizations.
In order to encapsulate the concept of a 3D position relative to a specific node, the traditional (x,y,z) vector had to be augmented with a node ID (x,y,z,node) and represent an offset from the origin of a specific node instead. This 4-tuple is encapsulated as a Siege Node Position, or SiegePos. Later on, we added a SiegeRot (quaternion,node) in order to handle comparisons between orientations across nodes.
The phrase “there is no world space” became a mantra to the team, although it literally took years for everyone to fully grok what it meant.
You can see more of his papers on Dungeon Siege here.