Setting up an instance isn't too bad, but it involves so much technical know-how, that a significant push to people self hosting their own instances probably isn't going to work out. If you know what a VPS is, know how to SSH, know how to get an HTTPS certificate, chances are you can read the docs and figure out how to get an instance running.
That's not really the issue though, the main issue is having some form of cohesion of communities. Lemmy is federated, but it's never going to take off if all these different communities continue to stay small and fragmented. And those larger communities need to handle all those extra posts and users, meaning their single server needs the resources to handle that demand. It's the centralization problem all over again.
I run my own instance, and while it's not hard to federate, it's cumbersome (I have to add new communities... to the search bar? What? Why?)
I would have expected to be able to drop in the name of a Lemmy instance, fetch a list of the top communities, and add the ones I want. You can't do this though, you have to add each individual "sublemmy" entirely by hand. It's tedious, and it makes discoverability nearly impossible.
Until that problem is solved, and until the Lemmy project finds some better clever way to organize similar interests across different instances ([email protected] and [email protected] need some kind of way to merge), I don't think it will be largely successful. We need a way of creating large, active communities, without so much friction between "what server is it on?" It needs to be seamless, so we can distribute the cost to operate across all our instances, so no single entity feels like they need to keep throwing money at their server provider.
The best way to support Lemmy is to start drafting those PRs to make it better and to get closer to that sort of system.