@moanos_foss Many tiny instances is also not a good idea unless each admin has the resources (time, energy, & money) to commit to monitoring for and fighting against spam and other nasties.
However, an intentional dividing of a large instance like this one into multiple small/medium instances, ensuring each is sufficiently moderated, could be a good idea. But then there are other considerations, like orchestrating user migrations and such which seems like it could be difficult to do correctly.
@moanos_foss at the end of the day it's probably easier and cheaper to just scale countermeasures against spam and harmful content on a mega instance rather than go through the effort of subdividing.
But I don't have any experience hosting an instance so, take my opinion with a huge grain of salt. :)