The idea is to get rid of “instances with open registrations”. It doesn’t mean that paywalled instances are the only way to achieve that.
We can have more people running their own small servers to share with their friends
We can have companies providing ActivityPub accounts to customers of their services (e.g, sign-up to the NYT and get access to any of the servers managed by Mastodon GmbH)
We can have companies operating their own AP servers for their employees
We can have phone/internet companies giving access to their AP servers as long as they have a contract or a positive balance on the top-up
We can have “pay it forward” instances: admins put up donations, but they explicitly declare how much they want per active user account. The instance only accepts new registrations when it has secured the resources.