I just read how the federation works, but I'm worried about a growing pain. Say I was a malicious user, could I bring down a smaller Lemmy instance by subscribing to as many communities as possible? Or maybe even subscribing to a malicuous Lemmy instance that keeps spamming thousands of posts every second?

Couldn't that easily fill up a server's storage and effectively bring a server down? I guess you could block the malicious Lemmy instance (although wouldn't it be easy to create another?) and ban a user that subscribes to too many instances, however, it feels to me like a very hard problem to solve