This makes sense: First of all, an instance needs to know about the existence of another instance in order to communicate with it. When you are following someone, you tell your instance about the instance of the other user because the instance name is part of the user handle.

But even if an instance magically knew about all other instances, simply receiving all posts from these instances and checking them for hashtags would not be scalable. It might work as long as there are not too many instances and users, but imagine tens of thousands of instances with hundreds of millions of users. A single instance simply could not process this amount of data.

Now you might wonder: How do centralized social networks with hundreds of millions of users do this? Well, one solution is having several servers, where each server is responsible for a certain set of hashtags (using something that is called a “distributed hashtable” (DHT) in software engineering). But in a decentralized network, this is not an option, because everyone would have to agree on who is responsible for each hash tag, and this party would then have full control over it.

This is where group accounts come into play. Group accounts simply repost every post where they are tagged. So, when you want a post to be seen by all members of a group, you tag this group. And when you want to see all posts to a group, you simply follow the group. This works, because a group is provided by a single server, so as long as everyone in a community agrees on using this group, everyone sees all posts, regardless of which instances are used by the members of this community.