I think Lemmy needs a higher-level sign-up procedure that hides the complexity of the fediverse. This could be a webpage with a simple, clutter-free interface that handles picking and registering on an instance from a curated list semi-automatically, for example, by asking you 3-4 questions before giving you a suggested server that fits your responses (which you can change) and a button to register there. The procedure could also handle the occasional additional sign-up requirements that some instances have.

IMHO, 90% of users will never interact with the “federation” aspects of Lemmy after that, and they also don’t need to. I personally don’t feel like Lemmy being federated has much of an impact on my user experience day to day.