Federation should be the way but time and again we have seen federation fail, first for chats (XMPP) then for Blurbs (twitter vs mastodon), and social networks where there's not even a big enough name to mention for federated social networks.
For chat, it depends on what you mean by fail. What actually happened/is happening, is that XMPP the protocol works so well, that most chat apps start by just being another XMPP app, and if they ever get traction they make their servers incompatible with XMPP. That's what WhatsApp did for example.
For social networks, Mastodon is quite large especially in the tech space. It's just not facebook-size. But given that Facebook's success is driven by getting people addicted to their phones, I see this as a sign that Mastodon is doing better. Mastodon doesn't try and get you addicted. And the federation aspect works AMAZINGly. I don't know/even care whether a user I'm interacting with is in the same instance or not. And I can subscribe not just to publications of Mastodon users but also blogs, photo apps etc which implement the ActivityPub protocol.
So yeah, what you said is not nonsense, but I 100% disagree with "doesn't have 1bn users therefore federation failed".
Even issues are mainly just discussions with some metadata attached and as long as they can be surfaced in a way to be attached to a project, then they could be created by anyone.
Hmm.. Surely there is already effort being focused in this direction?
But Forgejo is a git + associated services application first and foremost. It's clearly on the up, and this federation is no more than a planned feature that may or may not catch on. You make it sound like Forgejo will fail because of it, but it's just an add-on.