This was pretty much exactly my thought process. My biggest concern here is account stability-from what I can tell, if your instance gets taken down by its owners, your account is gone.

So until the devs figure out a way to centralize account credentials so that isn't an issue, I'd much rather join on a big instance than a small one, especially one that the devs of lemmy themselves own. They have a clear interest in keeping it running, so the chances of my account vanishing are small, just like with bigger social media sites.

The hard reality here is that, much like in real life markets, federated social media will likely tend toward a small number of very large instances and lots of significantly smaller ones. Most people want a stable, consistent experience and don't want to worry about losing communities or accounts. And unless an instance is STRICTLY policing it's communities, like lemmygrad for instance, then I think we will see the same thing happen with communities-right now there are lots of communities that are basically identical, and I think we'll see one or two of each become the "main" ones people use-and those will likely be on larger instances.