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If you’re familiar with IRC it works almost exactly like that but via a website. Your browser is your client and you can connect to and sign up accounts on any server. Channels can be seen and interacted with across instances though but they are still seperate entities, which is the only difference.
Although it seems like there would be multiple communities and fragmentation what usually ends up happening is that your server fedeates other popular subs though others interacting them and they still gain traction and get popular.
Also worth noting that you can sign up to multiple instances too. You aren’t beholden to your admins in the same way that you are over a barrel at other social media websites with a single account. Your browser and all of the apps support multiple accounts out of the box.
It’s honestly superior once you are used to it. I’m looking forward to the day we have federated ID to go along with it too without having to spin up a whole instance yourself.