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Currently, there are no spawns anywhere that are worth tackling with a 5+ person team. Unless you are herding, which looks to me like an exploit, even 4 people is a bit too many.
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The Trial Zones. These are designed for teams sizes 6 to 8 or so. Those spawns are HHHUUUGGGGEEEE - and challenging (at the low and mid levels). But many people don't take the challenge.
Again, I'm not sure what "penalty" is being allueded to.
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Statesman please... I know you know what penalty we're talking about because you're quoting from some of posts that discuss them. IT IS THE PURPLE PATCH. Currently I can team with 3 other people and we can take on mobs that are 3 and 4 levels above us IN THE TRIAL ZONES. If we add more people to the group, up to 8, we can still only fight mobs that are 3-4 levels above us because anything above that and our ACC and effects drop to nothing. Therefore since we're already at max XP rate with 4 people and fighting the toughest mobs we can fight in the largest spawns we can find them in, adding 4 more results in an XP rate drop.
Does that explain the "penalty?"
Now, if your answer is that we shouldn't be able to handle trial zone spawns of mobs that are 4+ above us, and that the changes to the game to make upper levels harder is the fix, I can accept that. But then you have to accept the fact that currently as the game stands, you do not want to have large groups.