You should always direct people to a landing page where they can choose from or be directed to multiple different instances.
https://kbin.pub/en or https://kbin.fediverse.observer/list
https://join-lemmy.org/ or https://lemmy.fediverse.observer/list
You can direct people away from specific instances if, for example, they have been de-federated.
I get what you’re saying, but I just can’t agree. Putting a decision early in the onboarding process when they don’t have the context to make an informed decision, it adds a lot of friction. If you are referring friends or members of a community, refer an instance you believe in. If they find out later it doesn’t work for them, they can always move. Personally I found choosing an instance upfront put me off from joining lemmy for weeks. And ultimately it wasn’t a very important decision in the long run as nothing is guaranteed and you can always move.
The problem is that you end up with instances that are overloaded or lack the moderating muscle, IE lemmy.world.
Yes, the network effect is known to exist. The community is large, therefore it will continue to grow. On platforms/sites where the community is small, people will stay away, because there must be a reason not to join. Human nature is there opposite of load balancing.