It does not matter how many people are on your instance. The only things that matter are that your instance hasn't been defederated from other instances with communities you'd want to participate in, that it is kept up to date and online, and that your instance owner/operators stay on top of moderation. I've not heard of any problems along these lines with lemm.ee
You have a fair point, but as of now I think being federated with beehaw, lemmy.world and lemmy.ml and a few others is enough to get some good content.
But you only get communities from them in all if someone has already subscribed to each specific one. You don't get all the communities from the instance automatically.
Well, at least I have compared c/all from my Lemmy.world account with my lemmy.ee account and I can't find any noticeable differences, if any here we have beehaw content.
No, you get more content on /local, but the same content as any other instance on /all (assuming your instance isn't defederated from other big instances).