Lemmy is a bunch of sites that are individually similar to Reddit. They all have their own “subreddits” and admins and users, paid for by different people and hosted in different places. But since they are all speaking the same language, they can interact with each other, allowing you to subscribe, post, and comment with other instances of the site from your home instance (the one where you registered an account)

Reddit is owned and operated by a for profit company, and order goes something like

User -> subreddit moderator -> Reddit admin -> Reddit executives / investors

With the fediverse, there is usually an open source software that anyone can download and run on their server. That software is free, and the server costs are usually paid for through donations or grants from non profits. The order there goes:

User -> community moderator -> instance admin

The instance admin may need to follow the laws of the country they’re living in, but usually there isn’t a financial incentive to make decisions. That’s one of the key differences.

So you could think of Lemmy as a collection of different Reddits that can all communicate with eachother. They all behave similar because they’re all running the same software (Lemmy), and they can all cross communicate because they all speak the same language (ActivityPub). That’s the other key difference, being decentralized. If one instance goes crazy and decides to ban third party apps, or monetize, or sell user data, it doesn’t bring everything down.