To get the obvious fact out of the way, yes, the latest Fortnite milestone is counting only how many registered users the game has and not active players. But that latter number seems to be at about 78 million, so hitting 200 million registered users is still a pretty major milestone. This means that you could fill a nation with nothing but registered Fortnite users and it would rank ahead of Bangladesh, Russia, and Japan in terms of overall occupancy.
It probably would not be a very good nation, because “we all play a video game” is not a spectacular foundation for government, but that’s not the point. This stat was included as part of the promotional material for the game’s launch in South Korea, which might push its registered user count to rival even larger nations. Not bad for a hastily converted single-player PvE survival game, then.