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You are wrong, you can have big instance and still federated. If the site is corrupted, the users can leave right away.

How do you want to federate Petabytes or even Exabytes of content? And your second sentence leads to a monolithic instance.

federated Exabytes of content

Unless you have special affection to YouTube moderation, this has to be done even if you want to believe it is hard, but that being hard is completely untrue.

Federated =/= unstructured p2p network

A host can be a big instance in fediverse, the others can host another instance, can visit the big instance if it has the bandwidth, but not necessarily host the data (which is the case for unstructured p2p network, where everyone does the same task). As long as it is free software, both the host and user skip the hassle of adopting different interfaces.

Peertube handles this because by default it is set to peer to peer mode so that your browser will also upload the video to other browsers who are watching it at the same time which takes load off the server. So for example, if five people are watching a video at the same time, the server might have to handle all five, but if a thousand people are watching that same video at the same time, the server only has to handle five or ten people, and then those people handle everybody else.

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