So if someone creates a new instance and subs to a community in another instance they won’t see the community history?
Correct. It does (sometimes) backfill a a page of old posts on first subscriber, but zero comments. There is no backfill procedure for new servers.
Right now Lemmy has pretty serious bugs, such as not sending comment deletes to all servers subscribed to a community. So things like backfill aren't getting as much attention because it's hard to even keep servers consistent with new content.
It could be because the admins are setting an amount of time to stop pulling old data. Or it could be the backfill issue. Mastodon had a similar backfill issue open as well, though that has been opened since 2016 and still hasn't been fixed.