Like does content get mirrored to my instance and then mine distributes it ala BitTorrent or is my instance it’s own thing?
Your instance is it’s own thing and will only push data that’s from communities created on your instance to others.
However, since your instance will have limited users, it will consume fewer resources and your browsing experience would be faster.
I’m not sure of where the limits are on the pushing side of things. If people from a lot of instances are subscribed to a particular community in an instance, there is a lot of outgoing data from there. This is something I’m curious about.