My FI is very close with his stepmother; she has never had any children of her own, and truly loves FI and his brother as if they were her own. As we move towards solidifying our guest list, our numbers are steadily creeping higher and higher. We want to be proper hosts and offer +1's, open bar, etc. so we quickly reached our limit, added a bit more to the budget, but have now reached the new limit.
My mother and father's families are relatively small. I am not close with my stepfather's family and will not be inviting them, and my father is not remarried. FI's family is quite larger, and currently comprises over 2/3 of the guest list; no issue there. The issue is that FSMIL is expecting her family to also be invited, and we can't accommodate that. It would add about 30 people to our maxed-out guest list. As is, we're inviting 10 friends total, including SO's, to a wedding of about 125 - 135 people so that there will be room for his family.
FI sees no issue with this as he is not particularly close with her family, and "can't remember" if they were invited to his first wedding (I'm-a go ahead and guess they were). I'm of course worried about hurt feelings, and am looking for a polite and respectful way to deal with this inevitable conversation.
His parents are not contributing any money to the wedding as of now, which is fine because a) it's his second wedding, and b) we would never expect that regardless. (FI thinks they will offer to pay for the rehearsal dinner or something similar, which is very nice.) Because of that, I know etiquette says we aren't obligated. I just feel bad. It sucks. I'm rambling.
TL;DR (yup!) FSMIL is super close to FI and will be upset that her family is not being invited to the wedding. How do we gracefully handle the conversation?