It will absolutely.
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The average non-tech savvy person will be extremely confused about how federated services operate. You say "join lemmy', and they say, 'ok, what's the site?" and then you need to explain, well, you need to pick one of about four thousand instances, and then only go there when you want to sign in. Now they're already confused. That can then be explained 'It's like e-mail, lots of different servers to get email, but they all work together." But this doesn't hit as well because a website is not e-mail, and so interconnected websites are not immediately intuitive. And as soon as you start going into any level of technical details, the average person just tunes out and decides "I don't want to deal with this crap."
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If they pick an instance (Like Lemmy.world or sh.itjust.works) that allows free signup, they won't have too much of a problem. If they pick one that has questions to answer and then a manual approval process that is COMPLETELY opaque, they will nope the fuck out immediately and not even bother to find other instances. Heck, I was turned off of Lemmy for several days because of this, and I'm very tech savvy, and have been doing this sort of crap forever. I signed up first at Lemmy.one, which eventually got my login active, but took 3 days. When I saw no indication of that signup working, though, I tried Beehaw. That STILL has not been activated and it's been 5 or 6 days, and of course, there's no indication of what's going on during that time...it's just a spinning wheel. Not until I went to an instance that didn't have these ridiculous manual approvals did I begin using Lemmy. The average user is not going to bother with that.
These are going to be the biggest things that hold Lemmy back (there are also some serious usability issues with the main feed, concerning repeat posts showing for DAYS, and the autorefresh everywhere, which pushes content down constantly if you're in the New feed).
I understand that....the average person is not going to. Also, you EXPLAINED it to someone (I also explained it to my wife, who is not a tech person at all, and she understood fine), but again, it takes explaining. For this to take off, it's going to need to be accessible without a lot of explanation. Otherwise people just won't care.