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.
Personally I don't know if Lemmy needs these to be successful. Depending on your viewpoint, Lemmy already is successful. Lemmy instances existed long before the current Reddit influx and seemed to be doing okay even if things were a bit slow.
Maybe I'm wrong about this, but it feels to me like most people coming over from Reddit are viewing federation as multiple people helping run parts of a larger single site instead of viewing each Lemmy instance as its own entire community and site with the great benefit of federation allowing direct access and communication to other sites running in the fediverse. Identities and communities are specific to an instance because that instance is an independent community. In that frame of mind, having a different account on different instances and overlapping community topics between instances makes sense. Same way multiple forums have boards about the same topic and joining multiple forums meant multiple accounts. Federation just makes it easier to see across that gap.
I think you are right, and I think a major contributor to this is how Lemmy is communicated. We are inviting people to a concept when they expect to be invited to a place.
"Join Lemmy!" indicates Lemmy is the site. A site. One coherent system. Then "and pick a federated server" just seems like random frustration.
"Join ! It's on Lemmy so you can easily contribute to the communities on Beehaw, lemmy.ml, toupoli, ... without creating separate accounts there." is how I think we should go about it.
That sounds highly inconvenient from a end user experience if I'm honest. As a predominantly mobile user having to have multiple accounts set up in app and remembering to change to the right one for each instance will get old quickly.
The problem is that Lemmy is being mentioned in hackernews reddit and elsewhere as a potential alternative. Not as an alternative with all those caveats in framing but just so.
Communicating what it is even more boldly might be useful (I know it's been done quite a lot in long self posts but that I'm not sure how much of that goes through)