The internet’s best resources are almost universally volunteer run and donation based, like Wikipedia and The Internet Archive. Every time a great resource is accidentally created by a for-profit company, it is eventually destroyed, like Flickr and Google Reader. Reddit could be what Usenet was supposed to be, a hub of internet-wide discussion on every topic imaginable, if it wasn’t also a private company forced to come up with a credible plan to make hosting discussions sound in any way like a profitable venture.
I honestly don’t know for sure. Maybe it’s cached on whatever instance your using, or maybe your instance is pulling the content directly from the target instance’s database (or more likely an API-like ActivityPub request to the target instance).
I was under the impression that lemmy/fediverse essentially functions like email. Your messages and content are stored on your server, but you can communicate with anyone on other servers.