You can follow and interact with communities on other instances. The split doesn’t have to happen.

On Reddit you have the same phenomenon, but it’s less obvious because there’s no server name. When r/ceilingfans has drama, someone creates r/fansonceilings, and then someone creates r/ceilingfanpics for both communities to share pictures in, but the split group doesn’t like interacting with the old group so creates r/picsofceilingfans.

Eventually the fringe subreddits bleed dry and the old subreddits get left behind.

On Lemmy the communities don’t die as quickly, because different serves have different rules. You can say things on sh.itjust.works that will get you banned on beehaw, and the moment any kind of communism/socialism comes up, there’s a big difference between the moderation on lemmy.ml and lemmy.world.

In my experience, most Lemmy communities are concentrated on communities on bigger servers.

I don’t think Lemmy will scale well, but that’s probably more because of the UI, servers breaking apps whenever they update, and the lack of moderators.