Lemmy.ml did exactly that and is one reason why lemmy.world got to be that big.

Once the server capacity is reached the instance should be closed and people will just go to another one.

I don't understand why people feel so happy about lemmy.world being ahead of the rest. It's against the point of the fediverse and has risks: the instance can be sold, can make decisions to put advertisement etc. It's like people didn't really understand what was wrong with reddit to begin with and how the fediverse tries to be different.