At a high level you’ve pretty much nailed what is happening.

What if that user deletes their account or it’s banned?

Lemmy federates these to let other instances know. Check the mod log (link at bottom of every lemmy instance website) to see the record of this).

What if Instance A just…shuts down one day and never boots back up? You’ll end up with these ghost entries inflating numbers. It’s not an easy problem to work around

This is already an issue, but a solvable one. Currently some instances are blocking hundreds of other instances that used to exist but no longer do, because Lemmy keeps trying to contact them and when it fails it retries.

But the solution probably isn’t that hard. Someone smarter than me can work it out but I imagine it working something like retry every 5 mins for an hour, every hour for a week, then don’t retry unyil you get a new request from that instance (e.g. for one of their users to subscribe to a community on your instance).

In fact, Mastodon is a lot more mature than Lemmy an I expect would have the same problem, so we can probably copy whatever their solution is.