I recently setup my own instance and wrote this for people new to lemmy:
Federated?
<span style="color:#323232;">~ Anyone can host a server
</span><span style="color:#323232;">~ Servers host instances
</span><span style="color:#323232;">~ Instances host Communities
</span><span style="color:#323232;">~ Communities host wonderful people
</span><span style="color:#323232;">~ Instances can communicate freely between eachother
</span><span style="color:#323232;">This is the federation
</span>
What makes Lemmy and any federated platform so interesting is the ActivityPub protocol. This allows Lemmy, which is a content aggregator social media, to communicate (or Federate) with other types of social media, such as Mastodon (a twitter microblog style) and PeerTube (video hosting). Meaning any instance of the Fediverse can independently read each others content, without the necessity of having to use different apps and/or accounts.