Because using random tiny servers is worse in other ways. With all due respect, nobody knows you and they don't know how committed you are or how much time you have. When your server gets DDoSed or hits a bug causing data loss, what will you do? Do you have the technological know-how to recover and quickly? If your server suddenly grew and it became more expensive to run, how does anyone know if you will keep paying the bills? If Lemmy has a bad zero day, will you upgrade quickly?

There's no need to answer these questions. I'm not actually asking you personally. But these are the kinds of questions that users have to worry about from random, small, unproven instances.

(Also, Lemmy does not favour small instances because the "all" feed, searching, and going to new communities are all better the more diverse users you have.)