I would think of a galaxy as being some kind of “zone” on the fediverse. Though instances can interact with each other, not every instance interacts with every other one.

Think of a niche subject (a group of instances, or a goup of managers, with interests only related to a particular religion, or political view, or collectors…), their instances might not interoperate with more generic ones and only interoperate between themselves.

Usenet had the notion of an island for groups of servers disconnected from the rest of the “world”.

That’s what I would call a galaxy.

I would find another term for your notion, like a “group”, or “local group”. There has to be a better term.