Honestly, users that can’t be bothered to check and subscribe to all knitting communities (which is really easy) will be snatched away from the first corporate alternative with more polish.

Open source applications rarely beat corporate ones in polish and ease of use; these aren’t the battles we have to fight. Lemmy is already near identical to reddit once you sign up and subscribe to the communities that interest you.

I don’t have plans to visit other instances, manage multiple credentials. Either I get to see it all from one place. Or these other places will functionally but exist for me.

You don’t have to manage multiple credentials. You can visit and subscribe to /c/knitting on another instance as long as your instance is not blocking it, or blocked by it.

If I subscribe to /c/knitting I mean I want every /c/knitting on every single instance in existence.

Would you? The point of having multiple instances is that /c/knitting@gaming.lemmy will be mostly about knits inspired by gaming, /c/knitting@memes.lemmy will be mostly about knits inspired by memes and so on. You may not want all of them. This is a bit of a stretched argument, but I want to showcase an example where fragmenting communities on a per server basis can be useful.

I know that for generic communities or hobbies it can be annoying, but it isn’t that hard to find the largest /c/knitting and subscribe to that, no matter the instance. Reddit’s centralized approach is more convenient, but we’ve seen the price we have to pay for that convenience.

You’re missing the point of having a decentralized network. As long as people are allowed to spin up their own instance, duplicate communities are bound to exist. You can view both of them or choose which one you prefer.

What you describe is a big problem for generic communities such as YouShouldKnow, NoStupidQuestions etc and even hobbies where most of the people practicing them aren’t good with tech.

For more niche stuff Lemmy works better because if you want to talk about, say, communism you can go to lemmygrad.ml and instantly get a front page with communities about communism. If Lemmy continues to grow I expect we’ll see more themed instances pop up (e.g. about gaming, technology, fitness) and Lemmy’s advantages over Reddit will be seen more clearly.