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Matrix has one caveat: it synchronizes every room (group chat) from another instance to your instance fully- which one user subscribed to on your instance. Because of this the instance-systems/servers are under heavy load for private userage (not controllable number of users and chats). Many governmental institutions (controllable number of users and chats) use though, because in case of "disasters/incidents" the data is not lost but saved all over all replicas.
So if I only run one Matrix/Synapse instance for my private group, does any of the matrix decentalized technology effect me? I would only have one instance, and my users will probably only be connected to my instance. Though if I'm understanding correctly, it sounds like if I subscribed to another instance, all of the chat communication on that entire instance is copied to my server as well? Does this include files? Sounds like it would use a lot of extra disk space.
Sort of. I host a Matrix Synapse server for about 15 friends. Some of them use rooms on the big Matrix.org server as well, some bridge to Discord and Facebook, and some chat with other smaller groups. By default, Synapse won't sync rooms you haven't joined. It also won't copy files - it'll fetch those I believe (although maybe it'll keep a few days worth of files around?).
After about 5 years of hosting it, we're sitting at 90GB total disc space used, of which ~70GB is the database. You can compress the database and save lots of disc space (50%+) but I haven't gotten around to that yet.
I see why they recommend not using SQLite lol.