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.
In what way is reddit more user-friendly?
One account gives you access to all the communities?
Years of UI/UX development (arguably, both are bad, but still more developed than anything Lemmy has)?
Easily navigate a user's post- and comment history?
Space for more specialised communities due to larger user base?
More, and more experienced, mods due to larger user base?
I'm sure we could play this game all day. I guess it depends on whether you see each instance as an individual "Reddit", or see Lemmy as a fractured "Reddit" with big chasms that need separate accounts to be successfully bridged.
Personally, I see Lemmy as potentially being the latter. Having one Lemmy account (or maybe even one ActivityPub account) would allow me to subscribe to the communities I'm interested in, without having to worry about whether those communities are federated with each other. The instance mods can still de/federated how they feel they need to, in order to make their mod tasks manageable.
If BeeHaw still wants a manual application process for vetting purposes, it shouldn't matter if I'm asking for permission to create an account, or asking for permission to bring in my already existing account. Instance mods can still gatekeep to the exact level that they want.