In my opinion, there are two big things holding Lemmy back right now:
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Lemmy needs DIDs.
No, not dissociative identity disorder, Decentralized Identities.
The problem is that signing up on one instance locks you to that instance. If the instance goes down, so does all of your data, history, settings, etc. Sure, you can create multiple accounts, but then it's up to you to create secure, unique passwords for each and manage syncing between them. Nobody will do this for more than two instances.
Without this, people will be less willing to sign up for instances that they perceive "might not make it", and flock for the biggest ones, thus removing the benefits of federation.
This is especially bad for moderators. Currently, external communities that exist locally on defederated instances cannot be moderated by the home-instance accounts. This isn't a problem of moderation tooling, but it can be (mostly*) solved by having a single identity that can be used on any instance.
*Banning the account could create the same issue.
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Communities need to federate too.
Just as instances can share their posts in one page, communities should be able to federate with other, similar communities. This would help to solve the problem of fragmentation and better unify the instances.
Obviously there are plenty of bugs and QoL features that could dramatically improve the usage of Lemmy, but these two things are critical to unification across decentralized services.
What do you think?
EDIT: There's been a lot (much more than I expected) of good discussion here, so thank you all for providing your opinions.
It was pointed out that there are github issues #1 and #2 addressing these points already, so I wanted to put that in the main post.
When moving to another mail provider, I can forward mails going to the old address to the new one.
When moving to another lemmy account (technically creating an unconnected second one), I have no way to be notified of replies to posts or comments I made with the old account.
There are a couple other use cases where the comparison doesn't really hold. My hopes are on Moving user profile to a new instance #1985, but it probably won't be implemented any time soon.
You're assuming that the reason for the move is not the old mail provider shutting down. If the old provider shuts down and you cannot somehow get their domain name, all mails sent to your old address will just vanish in the void (or even worse, be gobbled up by whoever owns the domain now, better hope there's no personal info in there that you wouldn't want in their hands).