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So does this mean each subreddit creates and hosts their own entire “Reddit clone”?

Each community owner must run a node 24/7 to seed his own community's content via IPFS. Similar to how you need to seed a torrent you client.

There's a GUI client so it's very easy, you just double click and leave it open.

It's also possible for centralized services to run communities for people, so it's technically possible to run a community without having to have any device run 24/7 yourself.

Is there a headless "client", so one can run a community on a raspberry pi or server?

there's a CLI client yes https://github.com/plebbit/plebbit-cli/releases/latest

friendly reminder that IPFS is not usable anonymously and it will reveal your IP to everyone

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