ActivityPub supports a less compelling user experience for many people: you only have a partial view of the network (you won’t see all the replies to the posts of people you follow on other servers), no global search, etc
It's true that this solution doesn't work for private posts and DMs, but the n in O(n^2) is much smaller there, so I don't think it's as much of an issue for personal data servers to communicate directly in those cases.