One community will be become dominant. It’s just the way things go. And it’s better for the user - why would we want discussions for some particular topic fragmented? It’s early days so some communities have competitors but one will be slightly bigger, more people will gravitate towards that, and the effect will compound.

As for federation yes a community is owned by an instance, sometimes a big instance.

But there’s no reason we wouldn’t have communities across a variety of instances. We already do. Most are on big instances sure since they have most users who create most communities, but there’s several larger communities on smaller instances. Like !houseplants@mander.xyz or !startrek@startrek.website