Ok so Lemmy itself isn't really a single app or service like Reddit, rather it's a software project that people can run on their own servers. It's a bit like email in that regard, anyone can run an email server, or you can just join someone else's like Gmail (think of instances as being like these). Instances can have their own rules and customisations, but they all still talk email (in lemmys case, something called activitypub) and work together, and you can send and receive content from other people even if they're on a different email provider (lemmy instance). Federating is basically two different instances agreeing to connect and share their content with each other. This generally happens by default. Defederating is the opposite, deciding to stop sending and receiving content from a particular instance.

Email is also a federated platform just like Lemmy. You can have email clients that talk to email servers, but "email" itself isn't really an app you can just run, it's a collection of apps and servers that all work together. Lemmy is very similar.

Also worth noting, the language (or protocol, to use the technical term) that Lemmy uses to talk between instances is called ActivityPub, and a whole bunch of different services such as Mastodon and Kbin use this! Together, these services are known as the "Fediverse" and the really cool thing is that they can all talk to each other because they speak the same language! If you want to, you can technically browse and post on Lemmy from Mastodon, and vice versa, even though they're completely different services. While it's a bit tricky with Mastodon since its much more like Twitter than Reddit, Kbin works really well with Lemmy and is generally interchangeable. People on Lemmy can join in on Kbin and vice versa. The whole system is really neat and if it sounds interesting, you should absolutely google it some more and learn all about it! It's a community project so if you like it and want to get involved, you can help create any part of this from contributing to Lemmy's code to running your own instance.

There's so much more to it than that, but I'm too new and generally technically inept to properly explain it