As I recall the idea was to promote looking for a Pixelfed instance with a community that fits your needs and interests, which in turn makes the network stronger by distributing the userbase over a variety of servers.

Keeping registrations open on what is often perceived as an "official" instance can lead to that instance getting most of the new users of the network, since it's usually the one you'll find if you search for the corresponding software. mastodon.social (previously open, now invite only) is a good example of that, IMO. I'm not sure if it's a good or a bad thing, but I do feel it subverts the idea of a federated network if most users are on a handful of known instances.

That's a nice thought. I'm the kind of user that's going to give up and move on if my first attempt fails, and I imagine I'm in the majority here.

Why would Mastodon or Pixelfed need users who give up that easily? Those most probably won't be good citizens anyway and they would not post and create content because it's too complicated.

I don't think it makes sense to have non-active members just for faking the numbers if it's non profit anyway.

It also subverts the idea if users are on no instance at all.