The problem with centralized social media is that the admins have power over you. They can ban your account with no recourse, censor some of your posts (or some posts you want to read), or even post something from your own account that you don't approve of.

Mastodon doesn't change this, it just changes who the admins are. It lets a person under the jurisdiction of admin A interact with a person under the jurisdiction of admin B, which is better than fully-centralized X, but it doesn't solve the fundamental problem. Your instance admin can still ban you with no recourse (account migration is incomplete, requires cooperation on both sides, and mostly exists to shut up Activitypub opponents who point these problems out). They're still just as (if not vulnerable) to government pressure as centralized social media, and considering that a single lawsuit could probably bankrupt most instances, I suspect they'd fold very very quickly. They can (and very often do) defederate from instances that post "too much nazi content", and if you disagree with the decision, there's again no recourse (you can migrate, but you won't get your lost relationships back).