I don't disagree that the Fediverse has an image problem; the sign-up stage could be killing legitimate interest from the average user - I found the instances confusing too when starting out on Mastodon and Lemmy.

But obviously I don't think anybody wants a Threads-type solution.

Maybe, to add on to what u/Die4Ever said about pointing users to an instance, the solution could be to have some sort of sign-up page that isn't tied to an instance. Using a bunch of user-selected inputs (e.g. location, interests, etc.), it selects the best matching instance and the account is created on that instance. This could relieve the confusion at sign-up.

IDK just spitballing.

Please don't do the one thing that it's meant to do?

What you'll end up with is Threads, do you want Threads?