I've been managing communities for like 7 years too, in the case of fedi it is beneficial to keep communities small not just to keep the load on moderators smaller, but it also strengthens the network and how healthily decentralized it is.

The more spread out users are across servers the better, not just to keep the moderation workload for each individual low but also because ultimately centralizing users on large mega-instances is a risk for both the accounts of those which reside on those instances, but also the collective power that smaller instances have over the whole network – We don't want one instance to become "The Gmail of Fedi" and have the ultimate say over what does or doesn't happen