That's like saying "Postfix isn't scalable like Gmail", comparing two completely different things. and in fact the fediverse is far more scalable than any single service like Twitter can be.
The fediverse is based on a protocol called ActivityPub, just like email is a based on SMTP. ActivityPub is designed from the ground up to allow any number of federated servers to share posts. Email servers can run Postfix or Exim (or others), and the fediverse servers can run Mastodon or Pleroma (or others).
One of the joys of the fediverse is that it's possible (and easy) to move your account (posts, followers etc) to another server. So when a particular server gets too busy, people simply migrate to another server, or even set one up themselves. Universities are already setting up their own fediverse servers for their staff and students, and I think we'll see companies following suit soon - again echoing the growth of email.
So that's the theory - what about real world? Thanks to Elon's unique management style, Mastodon active users (a good proxy for load) have gone from 370K to 2,500K in two months. I use it daily, and it's no slower with all those extra users.
Not necessarily a single big instance. Just one big implementation; that may use multiple instances under the hood. The centralization of Amazon allows it to polish up some kind of "portal" without worrying about the traffic concerns, and then use that to let users connect to internal instances, seamlessly, and external instances in common federated ways.
I know it seems like a long way around for not really providing any "value", but the idea is that most people just want "next twitter". They simply aren't going to deal with server instances in the way that, say, the gaming public does. People running businesses, being "influencers", or developing journalistic followings do not get any value from caring about technical implementation. So Amazon's strength, here, is that they could pick up a ton of influential people just by being "easy" and then the followers come for their interests.
Reminder that with Mastodon, more than with other services, you have to know and trust the server operator to respect your privacy and also to not act arbitrarily if you have a different political stance on an issue than they.
It's significantly easier to find who is responsible, and to sue them or arrest them. You can certainly afford to sue them more than a $20B company.
In contrast, the operator doesn't even have your phone number, nor demand a major corp email address, both things twitter required. You could log in via tor if you wanted.
Twitter could have sold your data, accidentally leaked it via an API or some cloud bucket, or it could have gone out with the help of a foreign intelligence operative employed there... And you have no hope of proving how or why. Their internal controls were incredibly lax. And the FBI would tell you to go away.
