Doesn't the minimum requirement for the first point seem a bit too lax? It still results in a largely closed off instance that is listed alongside the others.

I think those requirements make sense. The point of the list is to give people places where they can sign up that will have some activity. 5 active users is something and federated with another active instance means more content. Once they’re on the list, I bet other instances will want to federate with them and then users get even wider reach.