seems to be down at the moment

DNS. It's always DNS... It's back now.

To answer your questions:

Who do you imagine would create the majority of these requests?

Ideally, the answer to this is "the users who sign up to a fediversed instance and see their favorite subreddit missing on the list of recommendations." If this is going to be true, I honestly do not know.

How would the “best participating instance” be determined?

By the categorization matching. If someone wants to make a community to bring a local community (e.g, for a city in Australia) it would try to match the request with aussie.zone. If it's a science focused subreddit, it should try to match it with mander.xyz, etc. Granted, this assumes that those instances are participating and using the fediverser software on their side, and at the moment I'm the only one doing, but the idea of the whole project is to create incentive for instance admins to use it.

How long would it take?

A request should trigger some type of message to the admin. So, "as long as it takes for the admin to act on the message"?

Even if a community is created, it needs people to grow it, making posts and contributing to discussion

100% agree. This is why the other leg of this creature is the "Community Ambassadors" feature, which is meant to help people to grow their communities and find them content.