WSM supports the CVODES solver. CVODES is a sparse DAE solver. I do not know if WSM uses the sparse features in CVODES -- the developers would have to answer that question.
Sparsity is utilized in in several ways by SystemModeler. First, the symbolic processing applies standard techniques such as transformation into block lower triangular form and tearing. Then, sparsity of linear equation systems at runtime are handled using techniques for sparse linear algebra.