Most likely, and this works well because it allows time for server capacity to grow and for wrinkles to get ironed out gradually. Fediverse would have a hard time absorbing millions of people all at once, but a gradual trickle of users allows things to grow organically.

sure, but it's still an indicator of growth and some percentage of users does stay active

It actually does matter for the individual instances because the amount of content and interactions grows regardless which server users join because servers federate with each other. This is a fundamentally different dynamic from commercial walled gardens where each platform competes for users with every other.

I completely agree, the total number of users isn't really that important. The three things that count are having enough users to generate interesting content, developers who can develop the ecosystem, and people hosting instances. As long as these three things can be done sustainably then the Fediverse will be around indefinitely, and will likely outlast all the existing commercial platforms.

Too much rapid growth can also be a negative because it can disrupt the existing culture and normalize negative behaviors on mainstream platforms. When the growth is gradual then new people are more likely to adjust to the existing community norms.