I think you owe us a bit more reasoning than just a vaguely threatening title if you actually want to discuss. Or maybe it was really short shower?
Yes, big instances could defed everyone and isolate themselves. And the rest of the instances would live happily ever after.
Those who want big servers, would migrate there and those who prefer more signal than noise would stay on their smaller instances.
I don't see how that would "kill" the fediverse.