Fedibridge

Can Lemmy can scale to the size required if trans content was banned on reddit.

Yes. A Lemmy insurance doesn't federate all content to all users. It federates only a single copy of any content to each instance that has users that subscribe to that content, and those instances put it on the timeline of their members that subscribe to it.

The federation design can handle a lot more traffic than the trans community on reddit can generate.

I couldn't find much information on Lemmy's moderation tools.

It's better and worse than reddits tools. There are more active mods and admins that have less tolerance for bigotry, meaning that bigots get stomped on more reliably than on reddit. But creating new accounts is easy and locking down communities isn't as granular as it is on reddit.

Federation also allows an admin to restrict access to other instances that don't deal with trolls, or even to operate on a allow list basis. We're thinking of spinning up an allow list only instance to insulate sensitive groups from the wider fediverse, whilst allowing our members to access it.

Lemmy works by sharing data across multiple instances (computers) and it appears there seem to be privacy concerns about the amount of data on users that is shared.

Admins have access to the database for their instances, but that's true of reddit too. The difference is lemmy admins aren't selling that data off. And some instances (like blahaj) don't require an email address to register, and allow the use of VPNs. Privacy is best achieved by not providing identifying data in the first place and many instances work to enable that option.

What is to stop the owners of the instance shutting it down, or the data being lost for any other reason?

Nothing. That's the biggest issue IMO. Content that federates will still be available on the instances it has federated to, but even then, the loss of the hosting instance makes it hard to coordinate a replacement.

I have hope that as the fediverse matures, this will improve and user and community mobility will protect against this.

The only thing I can say here is that it's less an issue than the possibility of reddit just banning a sub, because at least most of the content is recoverable on lemmy.