The decentralization is good if you can get the numbers high enough for the individual communities to be useful, but having them concentrated creates a mini network effect, where each user is automatically exposed to all of the local communities, which would be harder to seek out and find individually. So I think there’s tradeoffs, and mostly-centralized and mostly-decentralized community-instance pairing both have pros and cons.
The process described and shown by the screenshots does seem a bit much for a cancellation. Suing feels disproportionate when I first hear it, but are there many other recourses to force it to become more user friendly?