ELI5

I feel like I just got the hang of it, so here let me try:

Imagine you live in a city (the internet). There are a bunch of good samaritans who have built massive houses (instances like kbin.social, mastodon.social, Lemmy.world, peertube etc.) that can host tons of people and also give you the construction plan for the houses, so you can choose to make your own kbin.bustanutella if you want to. Just because you're in a different house than your friends doesn't mean you can't communicate or interact with them. You don't even need to be a member of the same house to interact with them or any posts from their home. All that needs to happen is that both your house and your friends house need to agree to open their windows to each other, which is pretty standard as instances usually federate with each other freely unless an instance does something bad (spam, violating ToS, etc.)

So now, when your friend takes a shit on the floor of his house (makes a post), you get to see it and interact with it from the comfort of your own home. To interact with your friends, you would go to your own home and look through the window (login on your instance and search for the community URL or friend URL)

From all the use cases so far, it does seem like it is social media right now, but I don't see why it can't expand to other areas once adopted by enough people.