Ahh, I assumed the minimum "update resolution" would be the community, rather than the instance. I can't see how this will scale to millions of users.
Perhaps we're in the technical weeds, but, I'm still not sure I understand. If the total number of users is 1 million, you have 1 million people across the Fediverse. If all instance were federated, the total activity to your server would be the constant activity of those 1 million users. The total amount of activity would be the same between the spread and "lumpy" topology. The only difference would be where the updates were coming from, which I don't see why would matter, unless it's like one thread per instance for communication, which would be doomed anyways.
Outside of server load, another user gave a great list here.