So that instance admins can maintain more control over who can use their instance. I think it might be a modding nightmare otherwise.
Honestly I think such a decentralized distributed type website should exist, but moderation would be very difficult and it'd be like some kind of dark web 4chan
It's the same reason there isn't a central email sign on. Different people control different servers. They're all just using the same protocol so they are interoperable. Just like your email, you have an address that points to your particular account on your particular provider. [email protected]. It's essentially the same thing as email, just a different form of interaction.