In Lemmy, a community is the equivalent of a Reddit subreddit.
Each community has a home server, like this community is Lemmy@lemmy.ml, and you generally identify the community by its full name this way... including the server part. Local communities that exist on the server where your account is may omit the server part, but they are still homed to a server... it just happens to be the one your account is on.
Federation makes it possible to participate in communities on other servers. Like your account is on lemmy.blahaj.zone, and mine is on lemmy.world, but we're both able to post to this community which is homed on lemmy.ml. Not every lemmy server federates with every other lemmy server, but in general... federation makes the home-server of a community somewhat irrelevant.
Each server COULD have its own duplicate community, and in some cases that happens. Like there is both a Technology@beehaw.org and a Technology@lemmy.ml. It could also be possible to have two competing communities on the same server, like it would be possible to have a Tech@lemmy.ml as a third option. The end result isn't all that different from Reddit where you can have different subreddits with overlapping topics. In most cases, I think you'd expect one or two of those communities to get most of the subscribers and posts... just because mostly-empty communities aren't very useful. But absent major drama that splits a community into factions... most people would gravitate toward an established community even if it was on another server rather than start a new local community with no one in it.