I think part of why it's confusing is that we don't have defined names for these things. This is so early in a social media "product" life that there isn't a common understanding. You're now part of making those names. It's a bit exciting but mostly confusing while everyone uses their own terms to mean the same fundamental things. Embrace the chaos!
I don't know, Reddit and Lemmy differ from common social media platforms (I wouldn't really call Reddit style forums social media anyway) in that they are structured around different topics/categories and threads and in that way are closer to earlier newsgroups, bbs's, forums and such. So the main concepts aren't really that new and weird, we have had subforums, topics, groups, channels and such for decades now.
Yeah that's where I think the fediverse is failing new users. Talking about the fediverse itself and instancing etc is just making it sound complicated. No other social media/forum/whatever talks about its technology in such an up front way, for good reason.