Unfortunately, it seems, if I understand understand correcly, that this is not sustainable in the long term for small instances/servers. If Lemmy continues to grow in popularity, then the influx of content will continue to increase, thereby pushing small servers out of participation due to lack of resources. The data storage requirements, I fear, will become a very limiting issue.
I feel that if servers only tracked what their users directly participated in (i.e. only save comments, and posts directly made by the user), this issue would not be as problematic.
For example, I would like to host my own instance with only my account on it. I was initially hoping that my data storage requirements would only be directly proportional to how much I, as a user, use Lemmy; the server would only need to store my personally created data, and nothing else. Unfortunately, however, it appears that I would also have to have enough resources to sustain everyone elses posts which is a far steeper requirement.