I like Lemmy in general, it's what you would expect from a Reddit clone... but because of this kind of stuff, it's really going to be a hard sell for anyone who's not fundamentally a "fediverse" fan who wants Reddit to burn.
In reality, it is used for that and the censorship of ideas server owners don't like... or even just blocking a server because the admins of each server had a spat. It has been likened to little fifedoms each with their own flavor of tyrant, a little drematic imo but not wholely wrong either.
Another use is if you want to use the software, but don't want/need connections to the greater network. So you fully defederate and only allow your friends to have logins to your isolated server.
I personally don't have the time or the energy to follow stupid turf wars and trying to find out who is federated with who.
Kind of like with email, you don't need to have account with Gmail to send an email to friend on that server.