Having instances focused on one specific thing is the best solution, but it requires a couple other problems to be solved first.

The biggest one is discovery. Lets take your example of a fashion instance, hypothetically we’ll call it fashion.world. Lets assume I’m a user interested in fashion setting here on lemmy.world, and I want to subscribe to a fashion community. Currently the lowest resistance method is to hop over to the local community list and scroll through looking for any fashion related communities. If I’m a little more savvy maybe I hop over to the search option and take a crack at some plausible sounding community names starting with just fashion. That might work, but it relies on lemmy.world already being federated with fashion.world, which in turn relies on another user having already found and subscribed to one of their communities. On a very large instance like this one that’s probably a decent chance of having occurred, but on small or obscure instances it’s very unlikely. So we have a massive discoverability problem now. There needs to be some kind of centralized registry where you can type a term and see all the communities across all the instances that might be related to that term.

Another related problem is that instances, communities, and users, are closely bound to each other. I think it was a mistake to put everything together. It simplified things in the early days, it makes it possible to treat a lemmy instance as a mini-reddit, but it causes problems in the long run. Instead you should have a service for users to authenticate with and federate user messages and such, and an instance for communities to be hosted out of and federated. This would also simplify some aspects of moderation as user instances could setup a consistent set of rules they expect their users to follow. If you get caught not following those rules you get banned from the instance. Communities then could have their own rules they setup and via de-federation with different user registries you’d have a quick way of deciding the kinds of users you want in your community. Seeing a lot of hate speech coming out of the user registry run like a 4chan board? Sorry fellas, ban hammer time, that’s why you can’t have nice things. Not to mention breaking users and communities apart lets things scale in a more natural fashion, where the load the community server is under is directly proportional to the interest in those communities rather than if that instance happened to be the most well known one when someone went to register their account.