I agree, the all feed is commonly misunderstood to mean all of the Lemmyverse, but this is both a technical impossibility and also a false notion.
What the all feed actually means is all communities subscribed to by a member of your instance.
Especially on thematic, not too big, instances this can be quite interesting and definitely more useful that a bland feed of everything mixed together.
Obviously the bigger the instance, the more the all feed will tend to conform to a bland mix, and somewhat controversially a lot of instances are registered with a bot service that actively auto-subscribes each to other communities making the effect much worse.
Technically true, but since this tool got widely adopted it does mean pretty much a full pipe of everything: https://lemmy-federate.com/instances