See though, I still don’t see the issue.

you probably still have the downside of the users — and therefore the content & comments — being spread too thin

How are they spread too thin?

This thread and the OP are on lemmy.ml. I’m on kbin.social. You’re on lemmy.world. And the only reason I know all of that is because I checked each one. Until I checked each one, it was just a thread and I responded to it and you responded to me and it all just worked and there was no way to even notice that three different instances were involved, since it made zero difference.

If the mods of the communities had a tool to federate/merge at the community level, that gives the benefit of the network effect.

What benefit is that?

Right now, I can go into the list of communities on any instance and search for a subject and get all the communities that are about it. And yes, as I already noted, if I want all of them, then that means I have to click on more than one subscribe button - a few seconds of extra effort.

So the only “benefit” I see is saving myself that few seconds of extra effort, which hardly seems worth caring about.

I genuinely don’t see a real problem.