It seems to be an error with sign-ups through the app, I had the same issue with several different servers, but was able to create an account on their website and then log in through the app.
Even without it, the server navigation and selection (and no option to migrate your userdata) makes the sign up process a problem not worth solving for many..
A lot of people will just off-hand decide they don't really care, and leave. (This kind of onboarding is not sustainable of we want this to become a long-term fully fledged Reddit alternative, and not just another Voat with a lower percentage of racists.)
P.P.S: Also, apparently Mastodon was mostly Mark Ruffalo tweets (toots? the logo is an elephant, I think?), which are fine but uninteresting.
That is still enough friction to prevent people from signing up. I didn't sign up for a long time because trying to choose a server felt overwhelming. It wasn't until they allowed more sign ups at mastodon.social that I gave it another try.
Therein lies the problem. A lot of people already get decision fatigue trying to choose a server and don't get past the sign up. Assuming that they are still willing to try and use a third party app, you get to layer finding a good app that works reliably on top of that and learning how to use the app which will be significantly different from the website. There comes a point where it's not tech illiteracy but a lack of time and interest spending hours how to use a service that is much harder to get into than its competitors.