Can Craft handle thousands of entries and high traffic? We are going to start an online magazine. Registered users will be able to submit new entries (articles, places, etc...). Can Craft handle thousands of entries and high traffic (Of course with required server)?
Sure... we've seen Craft installs with several hundred thousands entries/users/assets/etc. running in the wild, but there really isn't a simple answer to this question.

As you pointed out, performance can be heavily dependent on the server and environment that Craft is running on, but that goes for any web application.

Performance on the front-end is also dependent on your templating architecture and code.  Craft does provide some {% cache %} tags that can help with some of the more database dependent parts of your templates.

If traffic to your site is significant enough, you can also consider putting something like Varnish in front of Craft as well as another layer of caching.