For one thing, half the active users don’t want the platform to grow and retain more users. That’s not going to work. We need new users to keep the flow of content and discussions. People will inevitably leave, die, post and consume less and less as their lives change etc. If we don’t get new users we won’t be around long term.
The other problem though is that the lack of an algorithm turns off a lot of people who can’t find anything. Lemmy isn’t easily searchable, content is hard to find again if you don’t interact with it the first time you see it by commenting saving etc. the search function isn’t refined enough to allow you to find things quickly across instances or even just in one instance. Add to that that you don’t get a whole curated feed based on the things you do interact with, and the lack of one to one communities to equivalent subreddits and you’ve got a major problem.
Niche communities won’t show up here unless they have a community behind them and a community needs people.
Plus the toxic minority here is very loud just because there’s not that many users in comparison to literally most other mainstream social media.