As to why, basically anyone is allowed to run their own copy of lemmy and some people actually enjoy doing it. There is more nuance of course. For instance, the owner can block other people's instances for whatever reason so no one on their instance sees content from the other instance and people from the other instance can't comment or vote in their communities.

There are definitely pros and cons to this approach, but the cool thing about it is the whole thing is back in the hands of real people and not owned by a bunch of investors.