Alright, so...I cannot find the person that posted this explanation but I think it makes more sense than the 'email analogy'.

Imagine the fediverse as a universe. Full of other solar systems and we are in the Kbin.social system

Now when we talk about Earth, we know it's in our solar system but what if another solar system also has an Earth, then what? Well, then we'd make sure to say which system it comes from, like Earth@ProximaCenturi or Sun@AndromedaGalaxy.

Same thing applies when we talk about places here, for example c/memes. When we talk about our memes we don't need any more info...it's the memes in our 'solar system'. But I want to talk about memes from the lemmy system and to do that I'd add the location info like memes@lemmy.world.

Tldr: instances are like other solar systems and magazines are like planets in those solar systems. We can hope in our ship and visit any other planet in the other solar systems