You can join communities (which are called magazines on kbin) that are on other servers, and people from other servers can join our communities on kbin.social. That's about it. You don't have to do any of that if you don't want to. You can just participate in the communities you like here on kbin.social and still have a good experience now that the instance is growing.
The nice thing about federation is that you don't have to worry about choosing between kbin or Lemmy because you're afraid of missing out on communities or content. And you don't have to have two accounts just to see what's going on in each.
If you find a Lemmy community you want to join, then you'll be able to join right from your kbin account here. So if there's a thriving community over on a Lemmy instance that piques your interest, you can subscribe to that community and participate just like any other threads. Posts will show up on your subscription feed and so on.
And that goes both ways, so once federation is re-enabled, you'll start seeing posts and comments from people on other instances.
Federation just takes a bunch of smaller reddit-like sites and lets them all interact with each other.
A lot of people were talking about going to stand-alone sites like tildes.net when they moved away from reddit. Imagine a dozen of those sites, all separate from each other - with redditors going in 12 different directions and separating into a bunch of smaller groups. Not a great thing, you just fractured a big community into lots of little ones. Now imagine that all of those sites could talk to eachother so that no matter which one you signed up for, you could still join a community on any other site.