I've had pretty much no issues, but the (10k user) instance I've been on has been closed to new user registration except by invite (from any existing user) the whole time this twitter thing has been happening.

Generally I'd assume that any big open instance is going to have scaling pains right now, but not all instances.

I wonder if Mastodon can even scale because of the federation.

When I tried running Matrix server, joining any large federated Matrix servers made the server unusable and it had to be stopped. I am not saying it will be the case with Mastodon but I would not be surprised.