That's all well and good in theory, but in practice it isn't as easy.

Communities here will naturally centralize to the biggest ones. If all of a sudden an admin of the instance that a certain massive community is on goes bananas and starts de-federating from all sorts of instances and makes stupid decisions, just saying "hurr durr just go and make your own instance and community" isn't helpful because 99% of the people there won't just pick up and start again on a different instance.

The decentralized nature was supposed to solve the problems with centralization, but really all it does is make the same centralization problems happen more often.