Is Lemmy right for me?

I'm looking to create a space for a small subreddit that I moderate that has maybe a couple hundred active users at most. I feel like the documentation provided here leaves a lot up to assuming the reader has prior knowledge of hosting a web service. I don't have any such prior knowledge so I'm hoping I can ask here. Please bear with me as I fumble my way through asking questions about a thing I'm doing for the first time.

I am thinking this is accomplished with a computer set up at my location, like a tiny little AWS in my bedroom running by the sheer force of my internet connection, and the hopes and dreams for my community. Or am I completely misunderstanding what it means to host an instance?

-Does the local machine store files like pictures posted by users? If yes I assume this means I should build a computer with sufficient storage to meet this demand.

-Does the lemmy install via ansible require the local machine to run an operating system? Or does ansible fill that role? I'm assuming the former based on the documentation for ansible, and that it should be a linux distro but I'm dense, so I'm asking.

-Is it required that the instance be federated to and visible to other instances? I would like for it to be isolated and somewhat private.

-The local machine would be connected to my personal business ISP connection. Could the instance be traced to my physical location? If so, what would be necessary to mitigate that?

-Am I entirely out of my depth? I can follow a guide real well, and problem solve, I just have no experience.

Thank you for your time!