In my experience having around 5 networks is optimal, where usually 2-3 networks deliver the best ecpm, while others fill the rest. Having less than 5 could be troublesome if you need to disable a network or two while figuring out issues (there's usually something causing crashes). If you have 2 strong networks (A and B) in the mix, I would set up 4 instances for both A and B - Premium, High, Medium, Backfill (mediation). If you get 10% fill rate on the highest target, you could try pushing it a bit, however I have usually seen that pushing too much affect overall revenue negatively, so I would be happy with 5-10% fill on a high ecpm. Remember to not only monitor ecpm and fill rate, but also ad revenue on user level. To avoid surprises you also need to be aware that some ad networks only have soft floors, not hard floors.
I would try with:
A Premium
B Premium
A High
B High
C High
A Medium
etc,
Personally I think 40 instances, as you mention, sounds like a lot of work, if that is for 1 app and 1 ad type (rewarded or interstitial)
I usually try to limit to 10-15 in waterfall to make it manageable, and have mediation pick up the rest. If you have 1 main market that brings you the biggest chunk of your ad revenue, focus on optimizing for that, and let mediation solve the other geos.
About A/B testing - haven't tried, as it required a lot of setup on each network last time I checked (multiplying instances), to make it work, so I didn't bother.
No matter how you solve it - make sure to establish relations with each networks and make sure they send traffic your way and include you in the good campaigns.
Best of luck!