You would be surprised then. Most SaaS companies can easily shard by customer. All the customer data stays together, relational and all.

Cross-customer queries will be somewhat slower.

Sure, but what you are describing is no longer a multi-tenant application/database. It's essentially a single-tenant deployment of your tech stack per customer. Which is not very cost effective.

It’s multi tenant —- you have 10,000,000 customers with 1,000,000 each on 10 servers, for example.

Or I don’t understand what you mean…

I would still consider it a multi-tenant system. It's a single database to manage, which distributes your customers using their identity as a partitioning key.

No, a single database manages multiple customers but the customers are distributed among multiple databases.