My understanding is that it's like email addresses. You can write to someone with a hotmail account from your gmail account.
Just like with email, being filbert@kbin.social is not the same, e.g., being filbert@lemmy.ml. They are two separate addresses.
When it comes to instances, creating a magazines (which is sort of like a subreddit and is exactly like a lemmy community) on one instance, will create a new one: coolshit@kbin.social is not the same magazine/community as cooshilt@lemmy.ml.
However, while you're in kbin.social, you can subscribe and interact with either of those magazines/community. And, if you go to search for magazines in kbin.social, you will see both of them listed.
Ultimately, if I've understood this all, it's just that as some point any particular instance's version of a community will gain the most traction and be the de facto version. coolshit@kbin.social takes off more than cooshilt@lemmy.ml and so everyone from across the fediverse ends up following coolshit@kbin.social more than the other one.