But you can read the source code and get an understanding of whether it is collecting private information or not. You can theoretically also fork the code and make your own version of Lemmy where you're ripped out the parts that collect private information. Can you do any of those things with Reddit? Absolutely not. You have no idea what exactly Reddit collects and even if you did you have no control over that collection.

What you're doing is questioning the privacy aspect without putting in the effort to check if your questioning is valid. Nobody is preventing you from reading the source code. And if you don't trust anyone else running the instance you can fork Lemmy, make whatever privacy changes you need and host your own instance. That goes beyond the capabilities of the average user but that's the catch with privacy, if you can't trust others then you have to learn more to get by without others.