Unless an instance enrolls in Lemmy-federate, the default behavior is that a user, even on the /all view, will only see local communities, and outside communities that another local user has sought out and subscribed to.

If a newbie joins a small instance and doesn't know how to seek out communities that interest them with lemmyverse.net, they would likely have a very small range of content in their feed.

Lemmy-federate helps by auto subscribing an instance to participating communities, seeding a wide range of content immediately.

A large instance would offer a good experience either way, but would encourage centralization without Lemmy-federate existing.