From what I see, Lemmy is growing and it may, eventually, grow if you create a local community for a city / region. My advice for anyone that would like to create a new community is to ensure you are creating content on a regular bases until there are enough other people to also contribute, with the knowledge could be a while (weeks / months????) before others discover it.

I am new to Lemmy, but from what I can tell you can create an arbitrary community, as long as the server allows it. Same name on different instances are treated as totally separate entities. In my opinion, as a new user, I think that is highly non optimal as it creates a fragmented set of users for a given topic. If you go to feedit.de and search for technology you will see a number (seems about 10 or so) different communities with the exact same name. It is up to you to go to each one of them and figure out which one, or ones, you want to follow.

Why not create it?

When federation works it is good. The instance I signed up for was missing quite a bit of posts across many of the different communities I had signed for. It seems better now after a recent upgrade, but unless one checks manually there is no way to know for sure if one's instance is federating properly.

The other issue I find is that because anyone can create a topic on any instance, that can cause fragmentation of less popular topics so basically none of the instances has a good representation on that given topic because the few people interested in the topic are scattered.