Does this only affect if you are profiting off of those links (like selling ads etc.)?

If yes, I my opinion it should be OK for lemmy as lemmy instances doesn't make profit ex. selling ads.

https://sub.rehab/

This site also collects/shows subreddits on alternative platforms

EDIT: seems like suggestions are closed now because of high traffic 😅

Because it is connected to your own ISP and it has the same location as you have (if you set it up at yout home). And sharing your own IP to internet.

Basically using self hosted VPN in same location is same as not using VPN as you are exposing same IP to the internet.

VPN doesn't hide IP, it just routes your traffic to internet via VPN server (and exposes that IP to the internet).

Seems like he's discussing it on sync discord