Nothing about this idea implies centralization. There is no reason identity has to be tied to the platform using the identity and no reason why there needs to be a central identity store.
In fact, right now my identity IS centralized to lemmy.world and I have no control over that.
Your solution to create as many identities as you want is great for avoiding having one identity, but not an example of decentralized identity.
I would like to be able to have multiple, decentralized, identities.
Imagine if login was a federated feature in lemmy.
What this would mean is that I could go to lemmy.ml and login using my lemmy.world account credentials and people from lemmy.ml could go to lemmy.world and log in using theirs.
Neither could go to beehaw and login because it does not federate with the two of them.
In this world I could create an identity on lemmy.world and a separate identity on lemmy.ml if I wanted to.
Now imagine if I could login with my lemmy.world account on a non lemmy platform that lemmy.world federates with.
There's nothing centralized about this, and it is exactly in the spirit of everything else in the fediverse. To login on beehaw I would have to create an identity on beehaw or someone they federate with.
What you seem to be against is forcing you to have only one login. That does go against the model we are talking about.
And it isn't what's being suggested.