Remember that other authors have to use the variables as well. That means additional work and higher concentration on a "rather unimportant" thing.
Some authors might not even realize that they have to use name variables and use the standard names or even use the names they used while reading.
And it's really annoying if you read a paragraph and think, "What? James? Who the hell is James?" or "Amanda would have never done that! She was described as the tiny, shy girl!"
I think two named characters are enough. In some cases, four or five might work as well but everything above is just additional work without any merit.
In my story, I use a variable for the MC and one for his wife. The MC is present at all times while the wife is present about half of the time. If a character only appears in every tenth chapter, it doesn't add much if they have a special name.
Rather allow the reader to choose nicknames as additional immersion variables for the main characters or names they could use during sex (like "Sex God" or "Daddy") though with the downsides Loeman already stated.
I think so as well. It's similar to the stories which start with 2 options of which each least to 2 options and so on.
Just calculate how many chapters you have to write. You said, "The Afterparty" only depicts one night but by now it already has 700 chapters. Now let's say there are notable events every month... so that would be around 50 of them for your story... that's 35,000 chapters. I don't know how many characters "The Afterparty" has, but I think from skimming it there were about 8 (honestly, I have no idea

)... so if you have 25 characters, that would be times 3, so around 100,000 chapters. Now... more characters mean more interaction between them, which multiplies the actual number of chapters. Each character could have about 3 times more interaction (8 to 25) which results in 300,000 chapters. Now if we assume that every chapter is about 500 words, this results in 150 million words. I think the biggest novel series doesn't even count 5 million words... so that would be even epic-epic in comparison to epic novels.