You have users, subreddits (servers), and mods.
Except everything is federated, so you also have the overhead of choosing your server or making a ton of alt accounts. Flashback to old MMO times.
You say you have the 'overhead of choosing your server', but then you have a similar overhead with every post on Reddit—choosing which subreddit to post it on. You absolutely don't have to make a ton of alt accounts, that's sort of the point of being federated. You create your account on a server of your choosing (even one you own/manage), and then you can follow anyone on any server (even those not using Mastodon, provided they're using an ActivityPub compatible server, such as Pixelfed which is similar to Instagram).
Mastodon encourages short form microblogging with individuals who know each other interacting on all sorts of different topics.
Reddit encourages link sharing or longer form posts with communities of like-minded pseudonymous users.
Both platforms can be used for both use cases though.
Anyhow, it's more "federated Twitter" than anything else. Particularly early twitter before the quote-tweets, algorithmic feed, and other modern features.