Ideally, I think instances ought to be something the casual user can be unaware of. Like the default experience should be instance-independent and the choice of instance should be some trivial thing that you can change on a whim carrying your entire user identity and chat history with you. I don’t really get any functional sense of community from my instance anyway

Step 2 is dead right. Before you can proceed, we’re going to need you to make an apparently important and irreversible decision that you didn’t even want to make, based on incomplete information.