[quote=@Sombrero]
I'd make it party-based, but I'm kind of into the idea that everyone would be their own character with their own motivations doing their own things independently or not, like Mount and Blade Multiplayer but with less hacking and more complex NPCs.
[/quote]

Well, firstly, there's nothing wrong with semi-generic fantasy by any stretch of the imagination.

If it were me, one thing I'd seriously consider doing is making everyone part of an organization that sort of requires them to work together but lets them maintain their own reasons for doing things. The two easiest ways of handling this? "You are mercenaries" or "You work for the Adventurer's Guild." Sure, these ideas may not come across as especially imaginative, but if you need people to travel around a fantasy continent together, there's little better than a common thread with a loose set of expectations (player characters can contribute to a group of fighting sorts in some way; player characters are expected to travel; player characters probably want money or fame for some reason).

[quote]Which is another thing, how would time be handled in an open-world rp that takes place in a landmass about the size of the British Isles put together? It would take a long time for people to travel between some places, and there would be no definitive party, so timeskips would throw each individual's continuity out of whack.[/quote]

I think you've chosen the best solution by shoving everyone into a group. What you could do, though, is run this as a few separate game threads and link the events together in some way. You don't have to worry about time as much, and you CAN always have a timeskip happen in one thread to catch it up with the others if you choose, perhaps asking the players affected "What did your characters do in this time?"

For example, character A and B are on a quest to find a holy artifact for their church. Character C is a swashbuckling adventurer who's just going wherever the wind takes him. Well, Character C goes and ticks a dragon off, and the dragon burns down a village. Characters A and B are behind, so you timeskip forward as they finish their current adventure. Rumor of a dragon attack reaches Characters A and B, and they now have a chance to link up with Character C, or interact with a place he's already, uh, set ablaze.

I don'w know how appealing that idea is to you, but if I had a lot of time to dedicate, that's how I'd go about it. But, again: you've already figured out the best way of handling this, which is "Shove 'em in a group and hope for the best."