There are certainly improvements to be made, but people seem to largely figure it out.
I'll note that if you click "Create Account" on mastodon.social at the moment on desktop, it shows a modal that explains that you can interact no matter which Mastodon server you sign up on, then shows a "On this server" explaining mastodon.social is currently closed for signups, reminds people that they don't need an account on mastodon.social to use mastodon, then a "On a different server" header that explains that you can create an account on a different server, with a big blue "Find another server" button taking you to joinmastodon.org/server.
I'm sure this still confuses some people (and more confusingly, if you narrow the window enough the "create account" button takes you straight to the link above without explanation; that doesn't seem like great UX), and I'd love to see tweaks to make it better, but the above seemed odd to me, not least because it doesn't seem like they've tried the regular registration flow, so I have no clue what it is they actually did. It seems maybe they've clicked the "Learn more" link, given the description about a "wall of text" about what they can't do?