It’s also what codeberg uses under the hood for those that don’t self host.

I think the benefits of federation is discoverability. I can spin up my gitea or forgejo (or something else!) Instance, but when people look for code in their instances, they can still discover my public repositories, and if they want to contribute, they can fork and open PRs from their instances.

So yeah, it means mostly you can selfhost and provide space to others, but with the same benefits that right now github offers (I.e., everything is there).

No, it means people can contribute issues and pull requests to projects on other servers. Repositories would only be created on the server your account is on if I’m not mistaken. I believe it uses activitypub internally, so should work the same as Lemmy/mastodon.

Maybe you would be able to disable other users from creating repos.