Exactly. Federation means no single instance needs to serve millions of users. If one gets too big and becomes too commercialized, you can move to a different one that shares your values. If large instances cost more per user as they scale up, we just need more instances.
I also think people are vastly overestimating the cost to serve users on Lemmy/kbin. Last time I calculated it, lemmy.world costs were around €0.01/mo per monthly active user. That can be maintained with 1% users donating €1 a month.