http://www.reddit.com/user/Wethospu_
Very interesting.
KTR also broke down the data in his blog.
Basically, the client is actually sent mob data on health and such (though the game doesn't display it), and when another play enters combat with that mob, it's stats (such as health) goes up (as opposed to player DPS going down). Even if a player who was fighting against that mob dies, it will not go down until they leave. Theoretically, if you have a large group of dead players who wiped on Tequatl who are waiting for a rez, they are inherently making the fight harder for the living by simply not waypointing away and running back.