I also see it as a good thing, why? Because you have instance moderators, and community moderators. If we join all communities together like that, were going to be essentially forcing these disparate community moderators to work together. This will never work, as people have different ideas of what should and shouldn't be allowed, and how to handle different issues (or even wether something is an issue in the first place)

Also there's the idea that if you don't like one community in one instance, you can move or create one in another instance, and everyone is happy - you could say that in this case redundancy is good, in case one falls into shit.