For me fediverse seems to be the answer to the current state of social media. The modern internet is big. Participation in the big things and an audience are a barrier of entry for competing services to rise up and replace the giant social media juggernauts that rose up in the late 00s and early 10s.
Granularity was actually a strength of reddit. The default subs on reddit and threads that hit /r/all have been bad for more than a decade now. But there were smaller communities beneath the surface that had better discussion and better communities, and niche interests, and you could lose yourself deep in a better reddit who's front page was nothing like the default. The unfortunate consequence of this granularity and perceived openness was that this meant that early on when people would have otherwise jumped ship to something new they just subscribed to /r/truethatsubredditthatdeclined /r/smalllocalcommunitysubreddit and something super high quality like /r/askhistorians or created their own communities. Of course the website would keep growing itself and be run by the same people who cultivated a bad default page.
Federation is the concession that modern internet users want larger interconnected networks. In the case of lemmy, we want something granular like reddit which allows us to have access to a large network of users while also being able to scale down and become granular and specific. But with federation it's able to be done in a way that is decentralized. In a way that prevents one major player from controlling everything. If reddit decides to make poor decisions or just becomes insufferable we dont have to go to reddit.com/r/better reddit, we can shift over to someones own original creation bleddit. Ideally the decentralized nature should means that the "default sub" wasnt the source of all creativity in the first place.
In practice I dont know if it will ever work. The big sites have so much momentum and critical mass its hard to shed off even a few new users. Look at how big twitter still is while Elon is literally tanking their service and while multiple competitors rise up next to him. One can hope that enough users are shed off the big sites to at least make the smaller pockets of the web viable and lively, but it will be some time yet.