It does apply, but not to the Lemmy devs, but to the instance admins.
As it stands, you can't legally host a Lemmy server in either the EU or the US (or places they can reach) and federate with the 'verse at large without fear that the authorities will come after you.
This is not true at all, you can host a instance in the USA for free and not be subjective to the GDPR. You're not selling anything, or marketing anything or doing any data collection to be sold. It %100 does not apply.
Read the rest of it, instead of cherry picking shit. The instance needs to be collecting your data and selling it or making some sort of money off of it.
the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union; or
the monitoring of their behaviour as far as their behaviour takes place within the Union.
Lemmy doesn't sell anything and it doesn't monitor you or collect pii.
Anything that someone's identity can be even indirectly inferred is PII. The GDPR explicitly defines usernames as online identifiers as PII.
The whole "irrespective of whether a payment of the data subject is required" bit is so that it applies to free services like Lemmy as well. Lemmy provides me with a free service. It even monitors me through federation, since it scrapes my username and comments from other instances without my affirmative and explicit consent. Using a service, no matter its nature, is not consent as required by the GDPR.
There is an explicit cutout for services you offer yourself or your household members. The reason it is there is that free services like Lemmy absolutely do qualify.
There are dozens of cases of fines issued to municipalities, and government offices that don't do business. France fined a parliamentary candidate. Italy has fined the Italian Archery Federation, an NGO. Germany fined a bunch of individual police officers and an employee of a Covid testing centre.
Please either start backing up your claim of some supposed nonprofit exception, or go sealioning somewhere else.