I agree with the scalability issues. Instance owners are going to run up against whatever they can afford to pay. If a given instance grows to a point where the hardware required to run it would be too expensive, then the admin has a choice: Donations, payment, and/or sponsorship.

All have their pros and cons.

Assuming "Lemmy" becomes popular (there's a ton of barriers preventing this so far). there's inevitably going to be consolidation between whoever can afford to support the largest instances.

Also, I think the most confusing part about the whole "fediverse" is that each instance is the entire "platform" of whatever it's trying to be.

This IMO creates massive fragmentation and a ton of confusion. Which one is the "authoritative" instance? Oh there's none? Oh...well...Hmm.

I'm sort of starting to think of it like this:

Reddit (or whatever fediverse whatever) is like a single shopping mall and the stores are subreddits. Each store needs a unique name.

Lemmy is like a bunch of shopping malls with each shopping mall having its own set of stores.

Stores within a single shopping mall must have a unique name, but can use the same name as a store in another mall. For example, you'd be hard-pressed to find two Foot Lockers in the same mall, but you're likely to find them in pretty much every mall you visit in the USA at least.