the problem with small instances is they die more frequently. sometimes without prior notice. i lost a few accounts that way. that lemmy server list said it wouldn't matter what instance i chose, but it really did. with this account, it's the longest time i had one.
however, all big instances started small. so we also need ppl to grow small ones. it's not an easy choice.
My issue is lemmy.world (and other bigger instances) is so big that it was just slamming my tiny personal lemmy then later piefed server, so I had to give up. There was a HUGE queue of changes for my little instance of one user.
I think the database load improved with recent versions. You can also try disabling synchronous_commit in postgres to make your database like 5x faster.
Instances only send you content for communities you (or someone on your instance) are subscribed to. If you don't care about politics you could probably subscribe to a bunch of smaller communities and not have an issue.
In general though Lemmy needs a lot of disk space, best to configure pictrs not to store images which helps a lot, but the database can still be huge.