How do you run centralised production without some form of central oversight? How do you decide which commune gets the power plant or local food distribution hub.

You don’t have centralised production or centralised oversight, you have distributed systems and mutual aid.

How do you decide? Some far away central body knows best for the needs of the local people despite never being there? Are those deemed less important to suffer because statistics dictate someone else gets the goods.

Can all production be practically done in a distributed manner?

Plenty of industry works best at scale-- you’re not going to build neighbourhood-scale high-performance steel mills or semiconductor fabs.