it seems you can see content posted on other instances but you can’t reply unless you have an account on that instance.

That's not entirely true (at least it's not how it's supposed to work). For instance all my other posts in this thread and my recent post about TGT R1 on NewElement were from my kbin.social account. My kbin.social account is also able to be added as a moderator of this community, even though it's hosted on lemmy.world. That's the benefit of all the back-end tools being shared. HOWEVER there do seem to be a couple caveats.

If communities A and B are "defederated", basically unlinked, then someone on instance A can post to instance B, but content isn't currently being synced so someone on instance B won't see it (but someone on instance A would). This can be pretty confusing and I think there needs to be a better way to tell you when an instance is defederated or disallow posting entirely if it thinks it's defederated to prevent this confusion.

What I also think might be happening is temporarily certain servers can't communicate, and there is no mechanism to "catch up" when posts are missed. For instance I can't see this single comment on kbin for whatever reason, but I do see it on lemmy.world and I can see the rest of the thread on both... there may have been some kind of technical hiccup. The tools to scan and copy missed posts and ensure things are current and stable appear to be missing or still in development. I have faith it will get better, as there are now a LOT of people working on it, and as people like us run in to issues it's being raised faster.

sopuli.xyz/c/rct is actually a totally separate community. I made that one first when early on it looked like sopuli.xyz might be taking off. I don't think sopuli.xyz is defederated from anyone and yet nothing over there shows up for me anywhere else. I don't even see that rct instance when I search here. I think this is some kind of technical or server side issue on sopuli's end and the communities that started cropping up there largely seem to have flocked instead to lemmy.world or kbin.social. Again note that as long as servers are federated, you can post to any of these with an account made on any of them.

if this particular instance goes down the community would cease to exist.

This is sort of true and sort of not from what I can tell. Every server that has federated with lemmy.world, and where at least one user has browsed to the federated community (in this case [email protected]) should have a full copy of the community. It may not always be current pending some technical nonsense that still seems to need to get worked out, but it's better than nothing.