Your best bet is https://lemmy.ml/c/selfhost but your options are either self host at home or a VPS. Hetzner are a decent VPS provider, some people are using them with 4gb ram/60gb space which is about £6 a month. I’m going to go for 8gb RAM/80gb space.

You can either use Ansible, Docker, Yunohost or do it all manually.

I’ve seen a few admins break down costs, but those costs are largely tied to the amount of users and communities that are homed on that server. lemmy.ml admins recently announced they upgraded their servers to a 60 euro tier to deal with the influx within the past week link a (detailing the resources), but they’re one of the largest ones. Here is something from the admin of my instance going over upgrading their server to deal with potential demand. I think the lemmy.world admin had something similar as well.

Do any of you know if there are resources out there explaining how to host an instance of Lemmy?

As for this I believe the docs pages go over everything required to set up an instance, but I haven’t set one up myself yet, so no idea of any potential pitfalls.

does every instance hosts every other instance in it too?

I’m not certain exactly what you’re asking here, but I’ll respond to the way I’m interpreting it. Every instance can view and post on other instances by default I believe. The communities on an instance you’ve created are stored on that instance, and I think they’re be cached on other instances that have had users of theirs subscribe to a community on the instance you’ve created.

Hope that helps!