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For peers to connect to each other, at least one of the two connecting needs to be port-forwarded, so if everyone were on Mullvad, now no one would be able to reach each other. Right now you can still torrent on Mullvad, but only with (non-Mullvad) users who use port-forwarding.
So basically you have the instance you are looking at. That instance has a list of communities (from any instance) that it knows about. A new community is added whenever somebody on that instance views or subscribes to that community for the first time.
When you go to ALL on that instance, it will show only posts from those communities (which are listed in the Communities/ALL tab). So larger instances (which know about more communities) will tend to have more stuff in ALL.
There is also the issue of defederating, where the instance decides to block other instances, and communities from those instances will not show up in ALL.
So ALL is a bit misleading since it doesn’t show posts from all communities on the Lemmyverse, but only ones that the instance knows about and chooses to federate with. However, a lot of the large servers will probably be pretty similar content-wise (except for ones like Beehaw that defederated from other large instances for various reasons).