Clearly coordination and agreement between leaders is needed. I suggested something like that with a pseudo-instance of "@global", for example. However, it seems there is some resistance to the mere idea of globalizing certain popular communities, which I can understand.

Federation comes with its own set of problems, like replication, data volume, storage requirements, and massive overlap.

That last one affects user experience directly, and needs to be addressed. Maybe it will sort itself out, maybe not. If we have 10,000 servers, even 100 almost the same communities means quite a bit of work on the part of users just to decide which ones to join.

We are looking at the human equivalent of a system with an extremely fragmented disk, or database tables with indexes that end up doing table scans.

Periodic re-organization will be necessary to to maintain usability.

I think a solution could be to allow communities to merge voluntarily if the mods of both agree to. It would only work with instances that aren't blocked anywere. But users that would be subscibed to one would automatically be subscibed to all the merged commuities as well and you could post to the merged commuity from any of the participating instances. That would have the advantage that if one instance fails the community would almost seamlessly continue on the other instances.