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I'm definitely seeing the benefits of belonging to a smaller Lemmy instance today.
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My understanding is that everything you do is first stored on your instance and then makes its way to instances that are federated with yours. I'm not sure about the specifics of it or deletion though. I haven't doved into the spec. Because it is called ActivityPub I bet it is the "pubsub" (publisher subscriber) pattern where other instances subscribe (federate) to be published to but it might not work like that.
This is why when you're the first user on an instance to subscribe to a community from another instance that no one on your instance has subscribed to yet it is somewhat more of an involved process because your instance was not getting anything from that community before and needs to start. I'm still new to this myself and basing it off stuff I've read people say who may also be wrong themselves though.