I believe certain european countries have or had free universities which instead filter students with incredibly difficult courses. Thousands might enter because both tuition and board are free and they would like a degree, but the university ensures that only a small group make it to second year. I believe the filtering is less intense in later years, since the job has already been done by that point.
Unless you're thinking of huge online courses like Udacity/Coursera, I don't think that's really a thing?
If it is, I'd be fascinated to learn more.
I mean, the logistics would be pretty wild - even a large university's largest lecture theatres might only have 500 seats. And they'd only have one or two that large. It'd be expensive as hell to build a university that could handle multiple subjects each admitting over a thousand students.
At least in Belgium it's quite common for a lot of students to fail the first year (partly due to the difficulty, partly due to partying instead of studying). But it's not like it's really free, the tuition is cheap but the accomodation is expensive. I also don't think it's particularly difficult on purpose to filter out students, it's just that it's not overly expensive and a lot of people are unsure about what to study.
Perhaps lifetimerubyist means "1000 students took the mandatory philosophy and ethics 101 class, but only 10 graduated as philosophy majors"