When I moved to Lemmy and learned about how federated sites like this work I realized how utterly impossible for something like what's happening to Reddit to happen. The biggest obstacle to Reddit users migrating right now is the fact that there's no equivalently sized community to move to.

That would never be the case here. In addition to defederating like you mentioned, users not in the instance in question could easily set up an alternative community, as easy as it would be to open a new sub. Users in the instance in question could easily migrate to another instance. No need to find an alternative platform, no need to make a new account (in most cases), and no need to worry about a new community being active and well established.

While I see downsides to the fediverse, I see some major upsides, especially in the wake of Reddit's implosion.