Remember, federation is copying, not creating some kind of remote view.
Is this true? It's my understanding that, lemmy for example, has the protocol in place for servers to communicate their content with each other, but each server's content is hosted separately.
Are you saying all federated services copy each other's data instead of only linking to it?
I'm actually referring to both. Instance owners are afraid to allow users to host content and they're afraid to link to servers that host content.