Our school likes to spend (apart from warmups) 50% of the time doing drills (these are the formalized chambered type stuff, but done at an aerobic pace where my heart rate is 160+; I wear a Timex heart rate monitor for this part) or other technique things (weapons, disarms, joint locks, etc.), and 50% doing sparring.
Sparring is freeform with the only restrictions being a) don't kick the other person's knees or otherwise cripple them and b) fight to your opponents level, don't clobber the newbies. This is usually standup but on occasion a clinch has turned into a grapple. Usually to finish up we spar all vs. all. Apart from the opportunity to be double- or triple-teamed by several instructors this improves situational awareness so that someone doesn't clock you from behind while you're tunnel-visioned in on the guy in front of you.
I find this to be very useful; usually if somebody's going to give you trouble without a gun involved, it'll be several somebodies.
That sounds like an awesome environment to train in! 50% of your time sparring is a great ratio. Your conditioning has got to be incredible!