I think it will ... if I look at my own use-cases for sites like this, it's connecting with people over shared interests (rather than instances) or scrolling memes. I don't see how any of these use cases benefit from federation (from the user perspective). The looming threat of information disappearing due to defederation, the confusion about instances, etc ... that's off-putting even to tech-savvy users.
Also ultimately I find it questionable from a philosophical perspective. Why should it matter which instance is your "home" instance, unless that's specifically the way of interaction you're looking for?
Again, for me it's interests over instances, and I think the federation aspect is just an additional layer that doesn't add any value.