Legally it's currently required if the instance is hosted under a jurisdiction with such laws.

Size or being mainstream doesn't really matter with current legislations. All it takes is someone suing an instance over that and then owner would have troubles.

Selectively denouncing instances under these laws could basically dismantle the fediverse, specially if this laws end up being approved all across europe and north America.

That's why you should probably take down your representative and put there someone who is not a moron.