The problem is most people are confused and overwhelmed by all the instance business to begin with.

It's a UX thing. Users can't be expected to read up on all the technical details of instances and the pros and cons of different ones before signing up. I don't know how it'd work exactly, but they really need a nice and simple "sign up" page that they don't need to think about.

Maybe a list of all the decent instances to use - meaning pretty much all instances that are not catered to a specific niche, open to new users and don't have any defederation drama ongoing - and then a global lemmy signup page can just randomly assign new users to one of those instances.