It's really not, when it's been proven time and time again that more people doing something ruin that something it should become obvious that lots and lots of people is a detriment
The reddit front page is a classic example of that, the general state of the internet proves it too, beaches/music festivles are both great examples too
That's not even thinking about the cost of everything and corporate meddling either
Moderation is not the issue, the sheer cost to host the tremendous amount of data is very likely to be a reason an instance goes down, thats what I'm getting at
One of the main reasons reddit mega turned to shit was due to far too many people joining and using it, granted this is due to mobile phones but is it really worth it to attract more and more people? These instances are run by average people not corps with money they can easily collapse under tuw burden of to many
I like how you ignored the examples I gave you