I feel like there’s not a great way to apply algorithms for something like a discover or explore section without a layer 2. Does anyone have any good examples for how other developers are solving this?

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I think nostr.band is what you think of as layer 2, or? I think @bruggeman fetches a lot of stuff, Indexes it and makes it available via an API for other clients. Don't know if it is available as a DVM yet.

nostr:npub1xtscya34g58tk0z605fvr788k263gsu6cy9x0mhnm87echrgufzsevkk5s did some interesting things developing nostrdb and can query insanely fast just on the client.

These are the two things coming to my mind right now