Federation is when two servers agree to share information using the same protocol. The best example of this is email. Different providers can send emails in the same format to different servers, regardless of whether they have the same owner because they use the same protocol. This is federation. Federation also has the plus of being able to choose which servers you want to share information with.
You're probably right that one instance isn't federated, or another option is that one server has an older record of a post than another and hasn't been updated yet for some reason.
I've never worked with a rust codebase that big. I've never had to deal with issues like that but damn, 10 minutes to run a test is crazy.