Lemmy is a monolithic application, so there's only so much a server upgrade can do.

This is sort of true, but not really true. The default docker setup is comprised of 4 containers. I've seen admins report that two of those containers (lemmy and lemmy-ui) can be horizontally scaled just fine. The pict-rs and postgres containers can currently only be vertically scaled, but Postgres natively supports scaling read load.at least through read-replicas, and there's an incomplete proposal to support scaling reads through separate db connections.

All of which is to say, it's possible to throw 4-6 machines at a Lemmy install. It's not truly a single-procees monolith. Would the Lemmy code be able to productively use all that hardware? I dunno. It's scaled better tombig hardware on lemmy.world than I would have predicted last week, maybe it can fully utilize a 6 machine setup, or maybe the db falls over first and you need to fix performance bugs because sn instance can scale to the user counts necessary to support bigger hardware setups.