Yeah, it seems more like an analog to having your account hosted locally than anything else. Like running your own empty Lemmy instance just for your account instead of creating one on .world.

Supposedly, they plan to standardize the federation protocol and hand it off to a nonprofit so that anybody can create their own proper instance. Supposedly. The way it sounds like the infrastructure is set up makes it sound feasible, if not plausible, but I'm not gonna hold my breath on whether or not that actually happens.