That is correct. Lemmy.ml is an instance that we're federated with.
The premise of how Lemmy works is that there are multiple sites and each site has communities on it. Each of those sites is an instance and when an instance federates with another instance, accounts from either instance and interact with each other.
Your home account is on Lemmygrad.ml but we're federated with Lemmy.ml which allows you to interact with their communities, accounts, etc
When an instance defederates from your home instance (the one you made an account on), you can no longer interact with their instance. An example of this is Lemmy.world
Things can get confusing quick when you talk about defederating because communities on an instance can block interaction from another instance rather than the whole instance defederating.
Actually everyone on Lemmy is a communist. But the .ml instance is run by authoritarian communists
