Yeah sure that’s a fine way to phrase it. It’s not what most people who talk about Mastodon mean by “instance”. In Mastodon, “instance” is a coupled and inseparable data hosting + app + community + moderation pairing.
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From a user’s perspective: To use Bluesky I need to create an account, and to create an account I need to choose the server where that account is hosted. Once I have an account I can follow any account even if hosted w/ someone else. That’s the same UX as Mastadon (leaving aside that moving PDS might be easier in ATProto than ActivityPub).
Well I think "can move later" makes all the difference because the initial choice doesn't matter to the individual user. It isn't even blocking. Most people don't know they're making that choice, and I think that's fine. In Mastodon, the choice is very high stakes.