You should always direct people to a landing page where they can choose from or be directed to multiple different instances.
https://kbin.pub/en or https://kbin.fediverse.observer/list
https://join-lemmy.org/ or https://lemmy.fediverse.observer/list
You can direct people away from specific instances if, for example, they have been de-federated.
The problem is that you end up with instances that are overloaded or lack the moderating muscle, IE lemmy.world.
Yes, the network effect is known to exist. The community is large, therefore it will continue to grow. On platforms/sites where the community is small, people will stay away, because there must be a reason not to join. Human nature is there opposite of load balancing.