This isn't accurate tho.
Neither Bluesky, nor other ATProto services require any of this.
RedDwarf is an example of an ATProto client that connects only with your PDS, uses Microcosm (https://www.microcosm.blue/ )'s aggregation index (they calculate aggregate counts for a variety of things with a couple of raspberry pis run off of a home fiber connection): https://reddwarf.app/
No big iron anywhere in the picture.
You give up the ability to search the network, but okay, that's already a feature that all Mastodon users sacrifice as well.
Does it work well? It sounds like it relies on scraping all follow relations in a central place (Microcosm) and then scrapes those feeds to find who replied to you.