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Everybody is talking about the GPDR, but the GPDR when hosting in the EU, should be the least if your concerns. As I said elsewhere:
The real issue is Directive on Copyright in the Digital Single Market which is a nightmare if you want to host lemmy legally. Realistically, the government don't care about a few copyright infrigement by some guy/gal hosting a lemmy instance in their garage.
But, if you want to follow the law to the letter, the EU doesn't have any fair use. So theorically, you need to allow users to only post creative commons images, with attribution. Or do some copyright checks on the content posted on your instance. Here is an EU video on how to comply with the directive, it's a nightmare.
Intersting you bring that up copyright. I was looking at Peertube just earlier today and I was wondering how on earth some of the larger instances are dealing with copyright. There is no way they can watch every second of content that gets uploaded
I think you're right though. Unless you get lucky/unlucky, its highly unlikely your instance is ever going to be used by many people, and therefore for most it'll probably be a grey area.
If it did however, you need to not only "administer" that instance, both from a front and backend point of view, but there are also things like copyright to deal with.