No, you're not thinking logically.
The university Christmas party was already announced as a big event in the game (episode 11). I highly doubt that only 10 people will attend. After all, it's a large public university event.
I think it's more likely that the New Year's Eve party will be a more intimate celebration at Isabella's house.
I am actually thinking logically, you're not.
The faculty party is not the big event of Ep 12, it's an optional event and because it's optional that means it's not universal. The main party of this episode will be universal for all players as all parties are. This faculty event is also not open to everybody, only faculty, special guests, and a few student performers like MC, Jill, and Tybalt. This means there wll be no DIKs, no HOTs, no dorm girls, etc. Sage being there is likely just due to her adoptive parents being faculty, but besides her, there probably won't be any other non-performer students there.
Also, 26 people is more than enough for the recital. You could have:
- MC
- Jill
- Bella
- Sage
- Tybalt
- Bianca
- Carla
- Stephen
- Jade
- Cathy
- Nora
- Philip
- Willcock
- Hagar
- Amelia
- Geoff
- The receptionist
And the rest could be extras, like the 4 other teachers we've seen and the extra guests from the Prep party. We could maybe even see Rusty there with his parents. Possibly Vivian and Miranda, Lynette's old friends could be there as well.
NYE party will be the big event of the episode because it's a big deal. It's not something done on a small scale in Bella's home. And it will probably have loads of students not normally seen at other parties like the Jocks, Preps, Nerds, feminists, and maybe even faculty if it's an event organised for the whole college. All those characters plus dorm girls and guys easily reaches 87.