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While the second paragraph has been slightly debunked, the first paragraph is an interesting idea I've underappreciated/neglected until now.
What do you think? Perhaps this is easier/more-scaleable than having federated instances with decentralised and often complex governance?
I don't think it matters how democratically elected a centralized solution is, it will still require decisions to keep the platform profitable which disenfranchises the users that provide all the content for the platform.
Decentralizing reduces that overhead cost, removes the need for appealing to investors, and places the power back into the users hands. It's currently skewed because everyone is flocking to larger instances, but when people are finally comfortable with the platform we should see a load balancing. And, if people are worried about being defederated on their large instance, they can always self host for almost free and have access to everywhere.
This is independent of the centralisation/Decentralisation part. Infrastructure and Moderation costs are created anyways. Ideally, these are finances by community donations and co. But a non-profit isn't going to focus on profit, because it's non-profit and because the community at large can vote them out if they start to worsen the platform.
In general I agree with your benefits of decentralisation. However, for people not much into Lemmy/Reddit/etc. the decision making is indeed much more difficult - and hard to comprehend.