Yepp, it works surprisingly well. I assume one of the similar communities will eventually "win" on one of the instances, like with similar subreddits over time. Also some instances will go full specific, like nature or movies or gaming etc. See the growth of lemmynsfw already, lol.

I'm really liking it a lot. I wasn't too amused by Mastodon either, but as you say: for link aggregation, for specific communities, for discussing topics (and not being about people, but about topics) this is a perfect match.

I even view the fragmentation problem in niche communities as a feature not a bug. Don't like the coffee community on one instance? Try checking out the coffee community on a different instance. You might like the second group of people better