Personal theory of mine is *.itjust.works meant to stand for “It Just Works” until they decided to give this Lemmy thing a go.

Yep it’s referencing a meme that originated almost a decade ago. https://youtu.be/nVqcxarP9J4

Furthermore, even if you wanted to operate an instance on a small scale you’d still have to deal with the full volume of posts from the rest of the Lemmyverse getting pulled and saved to your instance. If we had Reddit levels of activity here, every instance host with more than a couple dozen users would basically end up maintaining their own personal database copy of Reddit (more or less, provided those users were still joining the popular communities across the 'verse) which doesn’t sound like something I’d want to deal with as a hobbyist.