That doesn’t prevent power hungry mods from modding hundreds of communities, or mods or admins from enshittifying the most popular communities (or whole instances) with absurd rules or misinformation bots,

Then you jump to a similar community on another instance. In the long term the less restrictive place will win out. When the mods on the lemmy.world politics group nuked one of my highly upvoted submissions many months ago, I stopped submitting there and now all my submissions on that topic go to usa@midwest.social instead. I carefully researched which instance/community has the most reasonable rules. Bottom line is users have much more power on Fediverse than Reddit.