Well it had to start out somehow. The original project started off on GitHub so it just kinda stayed there. It does cost money to host these type of applications and its easier to have contributions on GitHub since it doesn't require most people to register a new account. It certainly has trade offs for sure.
>> its easier to have contributions on GitHub since it doesn't require most people to register a new account
> That's the big issue.
I don't think so: Github can work as OAuth provider, Gitea supports OAuth integration, so the self-hosted instance can still authenticate people using their Github accounts.
Gitea is not going to have hundreds of developers working on it, and users will not visit their project page all too often, so I don't see any scaling issues (besides, maybe, network bandwidth when they put out a new release and everyone comes in to grab the tarball).