That's not exactly how it works, FMA in communities and groups is usually that most users will likely consolidate towards single locations over time, lemmy.ml being one of the larger instances. Just because other communities can be created on other instances doesn't mean there is any actual competition (once late into the game), unless the communities themselves are so far broken or unusable or poorly moderated that a migration event does occur elsewhere.
It's the reason why subreddits like /r/pics have millions of subscribers and /r/pics2 is barren. Sure, it's not exactly the closest analogy, but lemmy.ml isn't going anywhere. Once adoption occurs, say in a few years time, do you think people are going to move communities?
Regardless, there isn't an argument for an individual user to be able to be moderator of several dozens to hundreds of communities.
That's fair but my assessment is rather than enabling that behavior, cut it off at the source by limiting the number of communities to be made per user. Sure, there'll be alt accounts, but it's better than just looking the other way and pulling another Reddit.