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As far as I can tell the lookout scans all servers for people to PvP or gamble with, I do know for a fact that the PvP arena is created on the least populated server and teleports all players there for the match then back to their original servers.
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I don't believe PVP is tied to any of the servers listed...I think PVP is contained in its own instance. You'll notice you're not able to bring up the seachest to see what ocean you're on. I agree that the matching mechanism could stand some improvements. Let's hope they fix it soon. A ship PVP would be even better!
