Think of each instance as its own reddit, except that if you have an account on one "reddit", you can also access the subreddits (called communities or comms here) of another linked (federated) "reddit".

imagine each instance to a reddit equivalent. but instances are also federated with each other.

this way you have access to other 'reddits'. each instance has its own rules, some are specialized to a topic, and some are generic.

as a general rule, it is better to choose a fairly small instace to spread the load.

to add more drama, some instances blocks / defederate from other instances. but you will learn this with time...