I'm definitely not an expert radio operator or anything, but this is how I understood it.

With Meshtastic, no, it actually gets worse beyond a certain point, especially in dense areas. Each radio rebroadcasts messages, so more message fill the air, causing more congestion. setting devices to client_mute (no rebroadcasting of messages) alleviates this to some extent, but most people don't do that. In general, a few well placed nodes are better than a lot of clients.

Meshcore with dedicated Repeater nodes alleviates that a bit, as a node is either a client that can originate messages, or a Repeater that can only rebroadcast. And it has a bit better routing protocol, reducing unnecessary duplicates in some cases.

The radio band is license free in many countries, but there's still some restriction, e.g. 10% duty cycle in my country, which means no radio can be sending more than 10% of the time (so 1 minute in every 10 minute window). That combined with (afaik) nodes only being able so send one message at a time limits how many messages can be in flight at an instant. And more clients increases background chatter from e.g. node announcements and duplicates, leading to further congestion. And in meshtastic, since packets "flood" out in all directions, and each node rebroadcasts again, and it's not directional, all the packets travel all over the place when you send a message. You could have a packet traveling in circles between new nodes for a long time.

E.g. in my region, originally the default for meshtastic was 7 hops on long range fast preset. That led to congestion so they switched to medium range fast, then recommended limiting hops to 5, and now ideally to 3, just so there's less chatter and less utilisation of the channel. 3 hops is barely enough for me to get out of the city I live in. Meshcore also does floods, but also can keep track of paths so you can have a relayed connection along a specific path that does not flood out in all directions, along with putting up repeaters being a conscious and strategic choice by users, so you get something more like a dedicated highway of repeaters that are placed high up and can relay messages much better than some client down at street level could. And the hop limit is more like 64 (I think it can be higher but that's what is set somewhere in the firmware). And repeaters are stationary, so they don't need to announce themselves to the network that often (e.g. every 3 hours in meshtastic vs every 24-48 hours in mesh core). All of that means less channel utilization and longer reach.