Reddit is a single website, made up of a collection of (link and post sharing) subreddits, each with its own moderators, policies and content preferences, but with one overall admin team who work for one overall boss, u/spez, with one overall aim - to make money from user generated content.

The creators of lemmy felt that the profit motive was actively harmful for this type of website, and decided to remove the single, powerful, profit-motivated owner model, so…

Lemmy is a collection of websites all running the same open source software, that globally shares (federates) all the user generated content, each website (instance) has a (local) collection of (link and post sharing) communities, each with their own moderators, policies and content preferences, but each lemmy website has their own admin or admin team, who are generally just the tech folk who decided set up the website (instance) and run it, so instead of one overall agenda that reddit has, you have many overall agendas.

Of course this sets up the possibility that different instances disagree with each other (what should count as nsfw, what’s acceptable speech, what’s acceptable moderation, which type of politics is unacceptable), and instances disagreeing definitely happens, but that’s kind of by-design to prevent one set of admins from controlling all of lemmy. Some of them defederate (stop sharing with) some of the others.

As far as I can tell, the money to run the computers on which the instances run is usually crowd sourced from (a minority of) the users themselves. Small instances are just run in people’s spare computers at home, I think. Anyone can download the software and make a new instance, again by design.