Thx, that makes much more sense.
So in real-life separation is based on pressure altitude above TA/TL, which is not an issue as all planes in the same area should have the same adjustment for actual temperature and pressure differences. Taking your earlier example of 2 planes approaching each other, one at FL340 and the other at FL350, if the actual temperature at these flight levels were much lower than ISA, both planes’ True Altitude will be lower than Pressure Alt by the same difference, so not an issue.
But the issue in the simulated world is that some sims do not correct for True Altitude and some do, therefore in the previous example, the plane flying at FL340 (in a sim that doesn’t correct for True Altitude) will be flying at FL340 True Altitude on Vatsim, whereas the plane flying at FL350 (in a sim that does correct for True Altitude) may also be flying at FL340 True Altitude if the temperature is much lower than ISA.
(I realise this may not be exactly how it happens, but it highlights why there is an issue on vatsim - I understand vatsim converts all planes, irrespective of what sim they are on, to their True Altitude so that this is no longer an issue)