You're making it complicated. For us oldies who lived on IRC back in the day it all seems pretty simple.

Bunch of different servers connected together where everyone can talk to each other no matter which server they're connected to. In Lemmy's case, the channels are hosted on various servers, but anyone on the network can talk in those channels regardless of where they're physically located. With IRC you'd just connect to the server that was the fastest based on your location. With Lemmy/kbin, you connect to the one that is the most stable for you, or you like the name, or UI, or whatever (I prefer kbin). But once you're on one there is no functional difference to the content because they're all on the same network (ActivityPub).

You don't need to explain the details of Federation to get people to understand what it is and how it works. Where any specific community is physically hosted has no real meaning when anyone can access it from any instance. Just like IRC, being in the US and speaking with someone in Australia, we're obviously on different servers but that has no meaning when the content (chat) is the same through both.