When you're in a Room the people closest to you are outlined in a colored bubble. You'll be able to hear the people in your group at full volume, while the volume of those outside of your group will be lowered
Part of the magic is how sound dynamically changes the same way it does within a physical space. That being said, when you want to talk to someone, you should be able to hear them clearly. That's why we created groups. Within Rooms, groups are created naturally and organically as you move closer to other individuals. Groups are indicated by a ring showing around each person's bubble and the view will adjust automatically so that everyone can see each other at once.
Groups (clusters of people that have optimized audio levels amongst them) have a maximum of 10 users. We do this in order to maximize the group audio experience because the more individuals involved in a big conversation the less engaging the conversation becomes. You can only effectively communicate with a small group of people before it quickly becomes like every other web conferencing call with a screen full of unengaged, silent squares.
If you try to join a group that is already at 10 people, the ring around your bubble will not match the group's and you'll see a message that encourages you to spread out around the Room and form other groups.