I'm an idiot and it's hard to explain but this announcement explains it pretty easily.

It functions on the fediverse, just like Lemmy, but is a different platform/front end. They function damn near identically but Piefed has a more active development team that actually responds to requests and a dev team that isn't transphobic as hell. That's the selling point for me. I think the only feature that's not available on Piefed that I use pretty often is being able to paste images into text blocks. Fairly sure they're working on that too. You can upload them, there's a clicky for it, but it just won't automatically upload and paste the link like it does on Lemmy. Literally the only thing "missing" that I've noticed.