If you visit a popular community like /c/memes@lemmy.ml with your web browser, the images shown are hotlinked from the Lemmy instance that the person posting the image utilized. This means that your browser makes a https request to that remote server, not your local instance, giving that server your IP address and web browser version string.
Assume that it is not difficult for someone to compile this data and build a profile of your browsing habits and patterns of image fetching - and is able to identify with high probability which comments and user account is being used on the remote instance (based on timestamp comparison).
For example, if you are a user on lemmy.ml browsing the local community memes, you see postings like these first two I see right now:
You can see that the 2nd one has a origin of pawb.social - and that thumbnail was loaded from a sever on that remote site:
https://pawb.social/pictrs/image/fc4389aa-bd4f-4406-bfd6-d97d41a3324e.webp?format=webp&thumbnail=256
Just browsing a list of memes you are giving out your IP address and browser string to dozens of Lemmy servers hosted by anonymous owner/operators.
GDPR believes an IP address is a private information. This can be used to mount a legal attack on EU-hosted lemmy instances.
If IP address sharing via hotlinked images, embedded content, etc were breaking GDPR I think the entire internet is breaking it. If I visit a blog, and then click an embedded video or image on that page, then my IP has been shared to someone else while visiting that page. This occurs on the vast majority of the internet.
EDIT: It wouldn't just be EU-hosted lemmy instances either. GDPR applies to servers outside of EU jurisdiction whenever they're serving residents of the EU.
Indeed. Most of the web is broken under GDPR's privacy requirements.