It really isn’t all that complex. Just read without the parentheses first, and then read with the parentheses a second time:

Anyone can host their own reddit (lemmy) and all the reddits (lemmys) are connected (federated) for the most part. Some reddits (lemmys) block (defederate) others for any number of reasons but for the most part you can access other reddits (lemmys) from the reddit (lemmy) you signed up on and read posts in their subreddits (communities).

Anyone hosting a reddit (lemmy) can decide to just not do that anymore. That’s ok because everyone else is still hosting their reddit (lemmy) so you can just sign up for their reddit (lemmy) instead, and access most of the same subreddits (communities). The only ones that you can’t access anymore are from the reddit (lemmy) that shut down, but people will probably make new ones somewhere else too.