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Why does Lemmy feel so fresh compared to Reddit?
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You're also forgetting that with a centralized platform everyone is stuck under the same roof. If we do reach that level of saturation then the communities can always splinter into a different instance or group of federated instances.
The problem with reddit was once we reached the point of everyone being there and the overall quality lowering, there was no refuge for the more engaged users to congregate and reform the communities that focus on quality over quantity. You could try and flee to more niche subreddits but it's really not the same, as demonstrated by OP making this post.
And then as you pointed out, the financial incentives are very different here, which will change how users engage with the platform and how the platform evolves as a result. Centralized platforms do everything to drive engagement to increase ad impressions and potential value to ad distributors. We have an opportunity to build communities with entirely different business models where growth is not an imperative.