Short answer: You will need to federate your instance with at least a few others, but it goes two ways, and yes, other instances federating with yours will need to meet the approval of that instance’s admins.

When instance A is federated with instance B it means A will copy all posts and comments from B, in addition to those created locally.

When you create your own instance you can federate from any other instance and you can start receiving copies of all posts and comments they have. [This is not done in bulk; rather, it checks to see what communities your instance’s users are subscribed to, and only copies posts and comments for those communities.]

However, in order for posts and comments created on your instance to go to others, the admins of those instances need to allow it. As we’ve seen from the recent kerfuffle between beehaw.org and lemmy.world, this may not always be automatically allowed. As more and more refugees are coming in, admins of large instances can be overwhelmed and may decide to be careful of small new instances until they’ve proven they’re well-run.

You can pretty much just start adding other instances. Most of them will federate with all comers, and manually ban any instances from federation that cause trouble.

And you don’t exactly add the instances. Someone on one server subscribes to a community on the other, and the instances talk to each other to make that happen.

Most of the servers running lemmy have federation enabled and open (as you can see, I’m one of those self-hosted instances) and you can just interact with them. Some do have federation locked down, but that’s the minority