Earlier quoted context omitted.
>and in denying the space to other classes of satellites. Is this actually an issue? The earth has a surface area of 500M km^2 so if want 0.5km between each satellite you can fit 500M satellites at one orbit level. A few thousand spacex satellites is a drop in the bucket.
Remember that, assuming circular orbits (which is fine for this discussion, I think), you have to fit satellites on great circle paths next to each other. For a single great circle you can fit a significant number of satellites in a chain, but turns out you don't want too many like that as all your satellites cover the same part of the earth. All great circles on a sphere will intersect in two places, which assures a…
It's not useful to make a simplifying assumption, if the solution to the problem is to reverse the resulting simplifications.