The DMA’s threshold is very high: companies will only be hit by the rules if they have an annual turnover of €7.5 billion within the EU or a worldwide market valuation of €75 billion. Gatekeepers must also have at least 45 million monthly individual end-users and 100,000 business users.
So instances will not be required to federate because they will not be making the thresholds. This could explain why Meta is going to use the ActivityPub protocol though, and is an interesting perspective on the issue.