I agree that the basic functions are similar, comping one particular instance of lemmy with reddit, but the fediverse, at least in my opinion, adds to the complexity. And when it comes to complexity, you have to keep in mind that there are business models out there focused on reducing the complexity of much more basic needs such as preparing a meal.

What if the instance I have registered with doesn't provide a particular content I crave? If a new account was required to get the content I'm liking for, it may be a deal breaker. This problem is solved elegantly by federation. But if I browse all to search for that particular sub(?) which one ist the right one?

There is (at least for a newcommer) so much choice (compared to reddit) which looks very similar at first glance. Choosing a sub or an instance is not complicated, but in it's nature complex, and the ability and willingness to handle that complexity may be major turn off for many newcomers.

I saw someone post that the competition between subs on different instances would drive quality, but that is not necessarily the case, when the metric I use is the number of followers in a sub. In the end, this thought of a free market will either result in a monopoly, one sub on one instance being preferred due to the amount of content and hence the visibility, or stagnation because none of the subs will provide the necessary quality to attract the masses.