Yes, you can only create a community on your home instance. You can moderate an existing community on another instance.

You can't create communities on other instances from your instance, but what you can do is you can create an account on that instance, create the community and transfer ownership to your current account or you can ask somebody nice on that instance to create the community and transfer the ownership to your account.

make sure there isn't already a community for what you want to create https://lemmyverse.net/communities

What community are you thinking of creating? Personally I would recommend making it on your home instance, unless there is a strong reason not to do that.

We are a Canada focused instance but we have lots of other general purpose communities. In fact, this is one of them 😄