Technically speaking Lemmy's improved a fair amount since before it blew up in popularity (compared to pre-Reddit API shenanigans), but it's still lacking in a variety of other areas, e.g. moderation tools & lack of any sort of modmail to avoid having to coordinate off-site, user tools/settings related to privacy and federation such as hiding profile elements or the opposite like enabling a microblog-esque mode for federating with Mastodon/Misskey/etc., and some other odds and ends (like not being able to mute/disable notifications for posts/comments, sorry OP!).

Culturally speaking Lemmy has similar problems as other federated platforms in that to this day no one seems to have worked out a way to better communicate them so that they're more widely adopted and grow significantly beyond the early adopter Linux/techie crowds (Mastodon's very gradually been getting there though). Some people also much prefer that, which is part of why and how these platforms have remained that way, but they seem to forget that small communities can exist within larger communities, and with well-developed federated platforms, ideally one could better curate their spaces more than they ever could in more popular corporate platforms.

Also regarding content, it's in a weird spot. There's a decent amount of it, but part of the problem is that it's neither all that varied nor original. There's a glut of news, political/technology mainly, memes/shitposts, many of which being older and thus reposted, and some mix of technology posts in general, then there's kind of everything else. If we were to throw together BS percentages, I'd maybe guess at like 32/32/32 of news/memes/tech, with the remaining 4% being everything else.

The issue then is, much of that content you can easily find on more popular platforms with greater variety and also originality, with potentially timelier posting, so outside of principles, what's the draw of any of the Lemmy instances? I think there's greater potential with more topic-focused instances (e.g. programming.dev/ani.social/etc.) and original content. That is, compared to the corporate models of attempting to be everything for everyone but really no one, and in turn also opaquely barring/removing/demonetizing creative content due to some ambiguous advertiser/copyright compliance measures.

Unfortunately you hit a causal conundrum where there aren't enough people yet for others to justify contributing original material, and there's not enough original material to draw enough people here to justify creating it and on and on. Classic network effect situation, in other words, which in turn also affects variety and timeliness of posts, and leaves everything in an awkward limbo state until several somethings start to change.