My FH and I are having a wedding within our budget - therefore we are limited to the amount of people we can have (and the venue can hold) - that number is between 150 & 160 total.
My parents are funding the wedding and my FH and I are helping out where possible (BP/GM gifts, flowers, DIY centerpieces and probably the rehearsal dinner). My FH's family is not funding anything for the wedding or Rehearsal Dinner. Thus far they have not offered to help with much either, I got the half-hearted, Let me know what I can do and I will see if I can fit it in emails from them but nothing else.
Since my FHs parents are divorced, my FMIL decided for me that it would only be fair if each family got to invite 60 people - so 60 people for my family, 60 people for my FMILs family, and 60 people for my FFILs family. That's already 10 people over our +/- count that our budget will allow.
We don't want to skimp on things like open bar & transportation to/from the hotel/venue so we had to keep the budget tight and on point. We picked our priorities and want to keep them even if it means missing out on something else like fresh flowers or a sunset boat ride for pictures...
My FH's family (in total) is about 95% bigger than my family and I have only met a few people from my FHs family throughout the last 12 years that I have known my FH. Just for some true to life perspective - FHs family would be well over 100 people (siblings, grandparents, aunts, uncles, cousins that are 21+) since he has already had the initial counts/requests for spots come in from his mom & dad/stepmom - My family would be a total of 6 people ( that is if I include my one aunt whom I don't speak with anymore but my dad wants me to invite and another cousin of my mothers).
I've already cut all of my friends off the guest list to accommodate their family but I am getting upset every time I have to tell my friends, who are more like a family to me since mine is very small, that it looks like it is going to be a family only wedding. And most of my friends know my family isn't more than 6 people so they are questioning me who is actually invited... 
Would it be impolite to tell them each family (mine & my FHs) each get 80 people and between my FMIL, my FFIL and FH they will have to figure it out among themselves?
I was also thinking of doing something I absolutely despise - having a B-List of attendees - so that if someone can't make it then they can invite someone else. Is that an incorrect thing to do?
I am looking for a viable solution so I don't have very pissed off future in-laws.