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Why Federation?
GoToSocial uses the ActivityPub federation protocol.
Federation means that you can hang out not just with people on your home server, but with people all over the Fediverse. Your home server is part of a network of servers all over the world that all communicate using the same protocol--they speak the same 'language'. Your data is no longer centralized on one company's servers, but resides on your own server and is shared -- as you see fit -- across a resilient web of servers run by other people.
Not all of the servers you 'federate' with will be running GoToSocial: popular implementations of ActivityPub include software like Mastodon, WriteFreely, and many others. GoToSocial communicates seamlessly with these other servers.
This federated approach also means that you aren't beholden to arbitrary rules from some gigantic corporation potentially thousands of miles away. Your server has its own rules and culture; your fellow server residents are your neighbors; you will likely get to know your server admins and moderators, or be an admin yourself.
GoToSocial advocates for many small, weird, specialist servers where people can feel at home, rather than a few big and generic ones where one person's voice can get lost in the crowd.