Issues that would be solved by time/gaining more users

• Not nearly enough people to cover all the niche interest communities that Reddit does. At Reddit you find an expert on almost any topic to help you with your problems and you'll find information on pretty much anything. Lemmy isn't there yet.
• Not nearly enough history. A lot of content is still good and informative after many years. Lemmy doesn't have a library of old-but-still-relevant content to search.

Issues independent of user count

• Search sucks. Reddit's search does too, but reddit is easily searchable via Google. Lemmy isn't.
• Onboarding is difficult, because you have to choose an instance, which is hugely important, but a newcomer has no idea what makes/is a good community to join

Issues that get worse with more users (aka, the potentially deal-breaking issues)

• Lemmy scales terribly. Every larger instance needs to retain a copy of pretty much all other content out there, and each comment/like/delete/update/... needs to be propagated to every other major instance out there. Adding more instances thus increases complexity and cost instead of decreasing it. Running a major lemmy instance is already prohibitively expensive now, with just about 50k monthly active users. If Lemmy was to scale to Reddit numbers (1.1 billion monthly active users, roughly 22 000x the number of users), everything would just break down.
• Moderation work scales just as terribly. Not only does an admin need to make sure the communities on their instance are moderated, but they also need to moderate all other communities on all other instances.
• Related to the last point, there's some legal issues as well if an admin doesn't moderate all other instances. Since content is copied from other instances to your instance, illegal content (e.g. illegal pornography, copyrighted works, ...) are also copied to your own server without your active participation. That makes it legally mandatory to moderate all other communities.
• Legal pitfalls in general. If lemmy becomes sizeable enough, all sorts of laws in regards to social media platforms will apply. That's one thing if the social media platform is run by a huge corporation with a legal department, but it's an entirely different story for a tiny group of non-profit idealists running the social media platform.