Some might argue that one instance dominating is against the whole Fediverse idea, but I disagree here.

Big generic beginner-friendly instances are needed. When users first come here, mostly from Reddit, they have no clue how federation works, and telling them to join mostly empty instances isn't really helping them. Instead, the advantage of big instances is that at least, even if the users don't get the federation concept yet, they'd still have tens of thousands of local users with whom they can interact until they naturally figure it out themselves.

Think of it as the equivalent of having Gmail and Hotmail in the email space. They are huge and are clearly dominating the email space, but they also serve as decent entry points for users who will then later maybe find the time to look for more options.