Selfhosted
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Broadly, yes. The way federation works means anything any user on your instance is interested in will be sent to you once (at least posts/comments/votes/etc). Whenever someone on your instance views that thing that is a request that would otherwise be made to another instance. This does, however, increase the load of federation on servers hosting popular communities, as now they have to send each post/comment/vote/whatever to your instance. Unlike bit torrent there is only one place responsible for sending you all of the content that exists in a community, so the fediverse doesn't get p2p-style network effects where every peer/sever helps even a bit.
A single user instance is a little inefficient, unless you are actually looking at most/all of the content your instance receives, in which case it is probably a wash. The ideal for how federation is implemented in ActivityPub would be many similarly-sized (in terms of user count) instances with the most popular communities being spread out among them.
Sadly right now the most popular instances (lemmy.world, lemmy.ml, lemmynsfw.com, kbin.social) are both where users and communities are, so the real gains to help those instances (several of which continue to struggle under the load) are really only medium and larger sized instances.
What is the easiest way to learn about ActivityPub?
A highly opinionated guide to learning about ActivityPub