When you pick “federated” you’ll see all posts, independent from your instance. But that’s pretty much impossible because unless you have Tusky the posts will be too fast.
So yeah, to be able to read anything you have to just read the posts on your instance, meaning it does matter which one you pick.
It does affect your experience.
Joining a server with a small number of people vs a bunch will impact your initial experience and how fast you branch out
It’s not anything that can’t be overcome but let’s not pretend every user understands how to expand their network
When you pick “federated” you’ll see all posts, independent from your instance. But that’s pretty much impossible because unless you have Tusky the posts will be too fast.
So yeah, to be able to read anything you have to just read the posts on your instance, meaning it does matter which one you pick.