Teaching skill
Teaching is the art of conveying concepts and ideas to others in such way as to improve the students' ability in the subject being taught.
Class Size
Student size is now as many as will listen in to the class. Teaching ranks still impact how well one teaches, but virtually anyone can teach any class regardless of skill in the topic or teaching skill.
Factors
How well one teaches one's students and your students learn depends on several factors. Teaching skill, Scholarship skill, Charisma, other mental Attributes, skillset of the subject being taught, and race all play their various parts. Some skills have special factors on top of these. Guilds with guild-only skills can only teach them to members of that guild. In the case of Empathy, the student must first link to the teacher and the class is restricted to just that one student.
Special Note
Teaching or listening to someone who is the same race and or guild as you is more effective and thereby trains better.
Training
If teaching or scholarship is the subject of the class, you will only learn two skills at the standard rate. In short, if you are observing a teaching class you don't get Teaching + Scholarship + Teaching. You just get the Teaching + Scholarship, and lose the Subject experience since you already gained some.
Anyone who listens to a class will now learn a small amount of teaching. (You gain the most experience in the subject being taught, followed by scholarship, followed by teaching.)
A student can convert anyone's class into a teaching class by using LISTEN {TEACHER} OBSERVE. This reverses the order of experience gained to teaching, followed by scholarship, followed by the subject taught.