Consider a system of $N_C$ $Dp$-branes (in Type IIA or Type IIB string theory, depending on whether $p$ is even or odd).
In the Les Houches lectures on supersymmetric gauge theories by Berman and Rabinovici, on page 80 (section 7.3) the following paragraph appears:
The expectation values of the Higgs fields in the adjoint representation can be shown to have themselves a very transparent geometrical meaning:
$$\textbf{x}_i = \langle \textbf{X}_{ii} \rangle \qquad (i = 1, \ldots, N_C)$$
$\textbf{x}_i$ on the left hand side of the equation denotes the location of the $i^{th}$ brane, $\textbf{X}_{ii}$ on the right hand side of the equation denotes the component of the Higgs fields in the $i^{th}$ element of the Cartan subalgebra of $U(N_C)$. In this context, the mass formula
$$m_{ij} = \frac{1}{l_s^2}|\textbf{x}_i-\textbf{x}_j|$$
is just the usual mass obtained by the Higgs mechanism.
To keep fixed the mass of these ''W'' particles in the limit of the decoupling of the string states $(l_s \rightarrow 0)$, the separations between the branes should vanish themselves in that limit, that is, these separations should be sub-stringy. In that limit, one cannot resolve the $N_C$ different worldvolumes, so the theory is perceived as a $U(1)^{N_C}$ gauge theory on a single $(p+1)$-dimensional world volume.
My confusion stems from the text in boldface. If the $N_C$ branes coincide (which happens in the limit $|\textbf{x}_i-\textbf{x}_j| \rightarrow 0$) then wouldn't we expect a gauge symmetry of $U(N_C)$? Why is the symmetry in the sub-stringy limit equal to $U(1)^{N_C}$ then? I would have thought that the gauge symmetry would be $U(1)^{N_C}$ when the D-branes are far apart.