The other commenter is correct but to add to number 3: there is not much difference to them now, but a lot of instances usually have a particular “flavor” to them. Like one might be more geared towards people who are interested I’m programming, others are leftist instances, others are geared towards furries, or music interests… but that’s very broad and you don’t HAVE to choose an instance based on that. A lot of new instances have cropped up that are just “catch all” instances for the surge of reddit users. Look at the sidebar descriptions to see if there are any specifics to the instance and see what you vibe with.

In terms of functionality they work exactly the same

It was recommended to me over Reddit as well. As I said in another comment, I’ve dabbled with Mastodon as well but I think I may like Lemmy more

I started using Mastodon a couple if years ago; didn’t stay for long but it definitely felt more…friendly than Reddit, or personal I suppose. Glad I found Lemmy though I love the message board/forum format way better than a Twitter like format that Mastodon seems to have, though I do like both