That's the thing I find noteworthy about the incident. I guess it's a disagreement with the definition of "decentralized." I suppose the mods were kind enough to allow it after appeal, but I don't see why they should be involved in the decision. I would expect it to be the minimum functionality to remain.
Go use Briar if you want a fully decentralized social network.
The title for the official site (https://joinmastodon.org/) states:
"Mastodon - Decentralized social media"
Also, I was using the root commenter's terminology, not my own interpretation. I would lean more towards your definition. It seems nobody can agree...
Sure, those are federated, but unless your running your own server ala Brier then it's not decentralized.
Most people do not need full decentralization though, a trusted instance run by a competent administration is sufficient. Burning battery and data to run a server on a mobile device is not optimal.
Paying for ongoing identity services is a nonstarter for most individuals.
But there ARE solutions that don't involve allowing someone else to be able to hold your identity hostage.