The primary incentive that comes to mind is improved availability. Often, instances can become slow, so I use another. By hosting a local instance I could always have a smooth experience.
Scores are federated, resulting in a consistent global feed across instances and a lack of uniqueness for each instance. I wish hosting an instance provided a more customized experience like this. It would be a great incentive.
for personal use, main reasons are you won’t have to worry about instance admins making arbitrary decisions that you don’t agree with, and no worries about server overload or downtime.
for making an instance for public, helping fediverse become a more viable alternative by spreading the load over more instances and helping it grow.
But doesn’t one need to federate with all the instances to be visible and view others? Say I’m self-hosting a personal instance that only I use, could I see every post from every instance from the get-go?
No, you only see federated communities that someone on your instance has subscribed to. So at first there is nothing but you can theoretically see every post by subscribing to every community in every instance.