It's a great question and you aren't doing anything wrong.

The answer is: no, you do not need a separate account for each instance.

Lemmy is great and I love it but it is not as beginner friendly as it could be and not as seamless as it could be. I believe in due time it will get better, but regardless we're working with what we've got.

Anyone on any instance can participate and interact with anyone else or any other community on any other instance. Once you've subscribed to a few communities (on Lemmy, "subreddits" are called communities) on various instances, then it's easy to find that content under your Subscribed feed. But finding those communities initially can be tricky sometimes.

My account is on the instance hosted at lemmy.whynotdrs.org, whereas your account is on the instance hosted at lemmy.world. I am replying to you from my home instance, from this post . It's the same post that you are currently seeing and participating in, but your are seeing the post through your instance.

If the server that is hosting lemmy.whynotdrs.org suddenly stopped working, I would no longer have access to my account or any of the content hosted on that instance, whereas you would still be able to use Lemmy because your account is available on a different server hosting lemmy.world.