I think it was a sensible decision to drop their own engine as nobody liked it anyway. Might as well go with a proven one and use your resources on stuff your customers want you to focus on. Since Nadella took over, Microsoft has been very well managed imo and they made a lot of right moves, like their move into cloud computing, embracing open source, integrating linux subsystem on windows, etc…
Their choice to ditch their IE/edge engine is a symptom of these better managerial choices.
I think you are correct. Lemmy is really just gearing up at the moment, but can’t handle the volume to compete with reddit.
The increase of instances, user guides, communities and third party apps are necessary building stones of a federated reddit alternative of size.