Ok, I'm not an expert but I've been hanging around here for a few weeks and this is how I understand it. I'm sure I've gotten some of it wrong, but hopefully more knowledgeable people can (gently) correct me.

The fediverse is a collection of protocols that effectively "replace" legacy internet sites that have become enshittified: Mastodon is the fediverse version of Twitter; Lemmy and Kbin are Reddit replacements, etc.

To avoid future shittification, the fediverse is built around the idea of decentralization. There is not one Lemmy. There are infinite possible Lemmys because Lemmy is just the "language" that allows the Lemmys to Lemmy with each other. Each of these Lemmys is an instance of Lemmy.

An instance is where you create your user; it's your hometown. You are registered in the lemmy.ml instance. I'm in the lemmy.world instance.

An instance is also where each community lives. Community is pretty much the replacement for subreddit. This community that we're talking in is the Memes community. It's in the lemmy.ml instance.

This is where it starts feeling more complicated. Other Memes communities might exist in other instances. They're separate from this community, even though they might overlap in name, purpose, etc. If you think of your instance as a town, you might think of a community as a location within the town. Your town has a skate park. So does mine. They're different skate parks because they're in different towns, but they both attract skaters.

So, you have users and communities that exists within instances. But these instances are in the fediverse of all other Lemmy (and Kbin) instances. That means you can "travel" freely between instances. You can view and post in communities from other instances because the instances are federated with each other.

But... If instance owners don't want to maintain the connection to another instance, they can choose to defederate from that instance. For example, if one instance is full of asshole racists, your instance owner might cut them off. Then you no longer have access to communities from that instance, and users from that instance no longer have access to communities from your instance.

With all that said, it's not super important to understand it all. Just hang out and have fun. Use the search function to look for communities that you're interested in. If they don't exist, maybe create one. Do what you can to contribute and create content and comment in the communities that you want to see grow.