From my understanding of Mastodon, you register an account with an instance and that's where your account and data are stored. You then get an address which is something like [email protected]. Federated instances can then connect together to read and exchange information, but for the most part your data doesn't leave your instance. I imagine the idea behind this is you can choose (or host) where your data sits, but still interact with a large network of individuals. That said, my understanding of Mastodon is limited.