I think the federation system is quite a barricade for some people. I recently changed over to Lemmy from Reddit, and it was quite challenging to first understand how it worked. Also I am not sure that I even now understand how this works fully.
Also the smaller community on Lemmy might be a turn-off for some people.
This was honestly the straw that broke the camel's back for me. I used to check reddit every now and then, but after this I just couldn't justify it to myself to use it. I used to post a lot of stuff, and I modded a relatively small community, but it just feels wrong to use it.
People couldn't care less if it's centralized or not. People come for the community, not the tech behind it. Also people are lazy, they will use the easiest thing that comes up. Why should one go to another instance, if the one they are right now works great?
I am not saying that this system is bad. I am just saying that people will always take the easiest option there is.
I don't like change that much, so I can tolerate a lot of stuff before changing.
How I see it is that every decentralized system with people is going to form some sort of centralization unless you actively fight against it.
In Lemmy's case, new people will check what are the biggest communities and go there, and since there are more people there, it attract even more people. More people, more communities in that instance.
Probably because the current system works for them, and changing it would cost political capita that could be used elsewhere.