Communities living on instances is a feature i think actually. Where else would it be? It must be hosted or originate from somewhere. I’m also not sure how you would make it more decentralised in practice - I mean, what if you defederate from the instance that has all the mods of the community for example? How is moderation handled in general?
Also to be clear, it’s more of an ActivityPub thing than a Lemmy thing. This is just how ActivityPub works.