On the other hand, reddit's ability to have user-defined sub-groups has given rise to good communities. To come at this from a personal perspective (though I believe it to be true from many other perspectives), there are a whole bunch of communities on reddit centered around various facets of being transgender. I think in a lot of ways, this kind of community has replaced the old siloed bulletin boards we used to have ten, fifteen years ago, and there's both advantages and disadvantages to that - but either way, I think the point I'm trying to make is that user-defined sub-groups can be a legitimately useful feature that benefits people's lives in a meaningful manner.
What reddit might get wrong is making it _easy_. Have you considered a system like stackexchange use, where setting up a new site is a big deal that requires use cases to be drawn up, example content, users who pledge to partake and maintain the site in accordance with the network's standards, and so on?