People can perfectly understand terms like instance or server...if they are explained to them.
They are also accustomed to concepts like social media and social network that can also be used to explain the Fediverse. Each server is its own social media platforms interacting with eachother through a distributed social network.
But, I actually think the Fediverse require an intermediate point between social media and social network, or something above it.
If the Fediverse (including in this case all decentralised protocols like ActivityPub, Zot/Nomad, Diaspora, Ostatus, AT Proto, etc) is a Social network and each particular instance it's own social media platforms that interact within the network, the software they run and the community they form part of within the wider fediverse is an intermediate stage between social medium and social network.
Now, if each server/instance are social media platforms and the software they run are the social network; the protocol or protocol they use is/are a network of networks and the Fediverse a network of networks of networks of social media platforms.
Having a variety of software from where to choose, even within the same type of platform is actually positive. These software, while similar — but not equal — in terms of UI are completely different in terms of userbase and culture.
Not all former twitter users gave twitter an usage that translates well into Mastodon culture. Instead they could be a better fit for misskey (although this one isn't 100% twitter-like) or pleroma. Or maybe the best for them is something smaller like GTS.
A neurodivergent person that needs to be able to quotepost because they find easy to process information that way is going to have a hard time in Mastodon where are not only now discussing adding the tool, but big part of its userbase reacts negatively to it. Again a Twitter-style fediverse microblogging platform that already has the tool, not only as a feature but ingrained in the culture might be a better fit for them.
Something similar occures with the link aggregators. Yes, they are "Reddit replacements", but they have different cultures, thus they target different kinds of former and in-the-process-of-leaving redditors.
The fediverse is to homogeneous, each particular protocol has its culture that's distinct from all others that make part of the Fediverse; each software using a given protocol has its culture that's distinct from the culture of all other software using the same protocol and each particular instance running a given software has its individual culture that distinguish itself from all other servers running the same software.
Culture and userbase behaviour are just or even more important than the list of features or the UI style when it comes to choose the best place for you on the Fediverse.
The Twitter-style fediverse microblogging platforms are all the same when you just focus on the design aspect and all you have used is Mastodon, but when you take into account culture, the way they behave and interact within themselves and with the wider fediverse...these platforms couldn't be more different from each other.
You say that some are "gonna get culled" but, with exception of projects that were dropped due to personal issues with the devs, but that all somehow live in the form of forks, the Fediverse is expanding and the diversity of platform types is getting greater each day. In fact, there are categories where more diversity of software is needed.