That's is one of major Lemmy flaw IMHO
They should have separated identification and content. Make a unified id system and then let people host their own communities on the federated level.
This would have been expecially important as you can't really move your account among instances, and would have make the registration process also much easier for normal users who just want to use the platform
I don't think the problem is much on the identification side, but on the communities one
Like, I can't access any community on .world while the instance is down