Selfhosted

If you use a full VM you'll lose plenty of performance and I don't think it'll cope really well with domain names. If you really want to go the "keep everything separated" route use container software, like Docker. It'll use the same kernel as the host, so no weird networking rerouting/bridging etc.. I don't have any experience with containers, since I run all of my "homelab" bare metal on a Pi, and with this approach I never faced any issues. Containers could be useful if you were running something unorthodox like Gentoo and you need to run software that won't work on it, even if compiled to run, but it exist as a package on another distro. Then you can just spin up a container for that distro, install the software et voilà, you're ready to go. AFAIK there shouldn't be a package for lemmy on any distro, so just clone the source code and compile it, it should be fairly distro-agnostic. Maybe you could compile it in a container to keep your host clean of compile dependencies, but other than that, there's no real gain. I like to compile stuff, so having a shitload of dependencies already there is pretty handy for me, but for a production system, it's better to keep it clean.