federation is just one way to achieve some form of decentralization... but only on one axis. the axis of "service provider choice". what is needed alongside this is a great "unbundling" of services.
in the usa, if you want to sign up for just internet, companies often (more often in the past) force you to bundle in phone and tv service as well. we can think of one of fedi's current problems as the bundling of several services into a single provider -- identity, data, communication.
another aspect of federation is that it inherently requires giving up control. once your information crosses the threshold or boundary, it is outside of your control. so, how much of your information do you want to cross the boundary? maybe you're okay with providing your identification, but do you really want to provide your data too? what do you think other systems will do with that information?
with federated identity, you can get past gatekeepers and enter some venue. but the data stays in.