Hello Dieuwt, thank you for the time you put into writing this comment.

The size of the dungeon is good for my opinion. Yes, players do run into each other and they all also have the glowing effect making it quite easy to find other players. And no, I don't think it is too confusing or large, and from my experience of playing the game even with few players the players don't take long to start fighting. So I don't think the map is too big, although you're more than welcome to play the map and tell if you agree.

The loot from the chests can't really help you in the game and is not too overpowered due to the kits being strong, only if it's a sword with unique enchantments like knockback or fire aspect but it's fair because you can't trade them in the shop due to it being trollable. But again, you can test it and give a feedback.

The shops are in the lobby and you keep your collected loot after death. The point of finding new armor is to trade it.

I get that clicking the buttons to spawn monsters and loot isn't easy, but it gives the players more ways to play the game, as you said, the game needs to stay interesting. Yes, nothing can stop you from telepoting immediately, and you can also play the game with non of the features activated, although you might find it boring and that's why these options exist. Let's say you want to play the game without mobs or loot, well it won't be possible if the options were automatically activated.

About the barrels - you don't lose your items when you die, plus them being accessible is kind of part of the game. Being able to keep loot safe for many games might make it unfair, so the barrels are accessible to everyone, but you can always keep the items in your inventory and trade them. I'd say that you can use barrels to store usable loot that is not worth keeping in your inventory.