When a user (say, my mother) gets to a page that says pick a server, she would immediately close the page and go do something else. How do you even begin to choose a server? What if you get it wrong? What should you consider when picking a server?
Its a simple concept that can be explained in a minute. But if you don’t have someone sitting next to you that understands it and can explain it, that user is gone.
Registration applications are an unrelated barrier but a barrier none the less. You don’t have to apply to Facebook and wait to be approved. People expect to just be able to sign up and immediately go.
For anyone familiar with the fediverse both of these things seem like non-issues. But for your average Facebook user. Hell, even your average reddit user, they will take one look at either a page telling them to pick a server or a page telling them they have to apply and wait, and unless they are familiar with the Fediverse already then they will back away slowly (or quickly).
When my instance turned on registration applications, there was a 10x drop in the number of registrations, and I’ve heard similar numbers from others.