Federation isn't always the right answer, when designing a self-hosted or autonomous software thing. Here are some reasons why it might not be (non-exhaustive):

1. Difficulty of moderation - you not only have to account for the users on your own service, but also that on every other service. This will be a familiar one to many fedi instance admins.

2. Difficulty of limit enforcement - if you're trying to keep the content size manageable by eg. introducing storage limits, it's hard to enforce these across the federation, as anyone can change the limits on their instance and it'd be weird if eg. large files are allowed from external users but not local ones. And blocking large external data is essentially partial defederation, and gets messy.

3. Protocol lock-in - the more interoperable instances you have of something, the harder it becomes to change anything in how it works, because everyone will have to agree with you on the change, at least to a point of compatibility.

4. Network traffic - content has to be distributed between servers, and that can generate quite a lot more traffic than you would expect. Not always a downside; it depends on whether the federated content is actually being accessed frequently on remote servers, because if so, you otherwise would've had to serve all those users directly. But this often isn't the case with opportunistic federation of data.

5. Context collapse - it is very difficult to provide a global network view across a federated network, at least in a way that doesn't use absurd amounts of resources. In practice everyone will usually only see a part of the network, and that can rip eg. conflicts out of their original context, causing them to escalate unnecessarily.

Note that most of these apply to fully-decentralized systems too (and those have some problems of their own); often the optimal solution is many self-hosted centralized instances, rather than full decentralization or P2P systems.

There are definitely some cases where federation still makes sense, like in a chat system where semi-universal reachability is the point, much like a phone network.

But federation isn't free; don't make something federated just because you can; often it's better to run many copies on single servers, and maybe just share an account or identity system, or some similar 'restricted' form of interoperability.