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.
I think anyways the registration process should be dumbed down. Simple version:
This would balance the load between instances and make it much easier for newcomers to join.
I realize we were talking about slightly different views. You had a scenario in mind where people try to join a specific instance (for example because someone promoted that specific instance somewhere else), I was talking about https://join-lemmy.org/
I actually like that idea. It's simple, and effective.
That would be awkward in some cases. Say, if a non-Nazi ended up on a Nazi server by random chance.
You're right, situations can occur. But it's not a permanent thing. People can make another new account on an instance which they deem suitable after they have familiarized themselves with lemmy by spending some days or weeks in it. Expecting a bloody newcomer to choose a good instance isn't so far from random choice anyways.
Also tbh, I have little to no interactions with people from my instance. I subscribe to topics I care for regardless of where they are hosted. People like me would hardly notice they share a server with nazis, as each would flock to different communities.