Long answer: Instances federate with each other by default. Sometimes an instance defederates from a particular other instance, usually for good reasons (and oftentimes you’re not missing out on valuable stuff). Your instance hosts your account and stuff you post, but connects you to stuff hosted on other instances as well. If some instance goes down, noone can access stuff posted from that instance (like users, posts etc.)
Short answer: yeah.
Long answer: Instances federate with each other by default. Sometimes an instance defederates from a particular other instance, usually for good reasons (and oftentimes you’re not missing out on valuable stuff). Your instance hosts your account and stuff you post, but connects you to stuff hosted on other instances as well. If some instance goes down, noone can access stuff posted from that instance (like users, posts etc.)