I agree that moderation is a chokepoint. And that it scales two ways:

- Moderating users, which argues for smaller instances.

- Moderating instances, which argues for larger instances.

That is: there are presently about 18,000 Mastodon instances. At 1k profiles each, this means a maximum Fediverse size of 18 million people. Note that 18k is an order of magnitude larger than the peak user limit.

Twitter sees, roughly, 200m MAU (monthly active users). Facebook sees 3 billion.

Mastodon at those scales would break both in terms of instance size and number of instances. With an even balancing, you'd have ~ 15k instances of 15k members, or 30k instances of 30k members. The overhead of moderating instances at that scale would be large, and some intermediary tier to offload that workload would likely come into existence --- effectively a hub-and-spoke hierarchical network.

The alternative would be something like present-day email, in which long-lived early-established mailservers are (mostly) grandfathered in, and increasingly draconian rules against new servers, TLDs, or even national-level (BGP) blocking comes into play.

Note: I've been on Mastodon since 2016. Played in email antispam space for a while as well.