this post was submitted on 05 Jul 2023
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I'd say the suggested practice is going with smaller instances (i.e. anything that isn't lemmy.ml or even worse lemmy.world). But sure, if you want to spin up a custom instance that would be even better. You'd have the advantage of being able to customize your experience a lot more (changing themes, editing the code to fix stuff you don't like, managing your own emojis...)
I'd say around 10€ a month. My instance pays around that (maybe a little more, can't remember) and we have over 100 users. It's really not that expensive.
You become a mega janny. You have to draft server wide rules, appoint mods and make sure they don't screw up by letting banned content through. Depending on your country's laws and where your instance is hosted, you might risk hosting illegal stuff for which you as an admin would be liable.
Others have already replied to 4. and 5. so I'm not going to make this wall of text any longer.