If community A sucks balls you can go to community B

The free market works

No central authority means people do what they want. Maybe the mods there decide to suck at some point, or the instance admins suck, or the instance goes offline, or someone just felt like having their own.

It's the natural evolution of a federated social network.

It'll all work itself out eventually. Some communities will thrive while others will slowly stagnate. This all happens by nature. Give it time.

To add another angle not mentioned: Something I'm not sure of but interested in finding out is if multiple communities allow for better curation than one single large one.

For example, imagine a huge sub like /r/pics. When browsing "new" on that sub, the content goes away and is refreshed with even newer content in practically the blink of an eye. Because sooo many people are posting all at once.

As a result, a lot of good content gets missed in the flood of everything, and you have to rely on time of day and luck to get your post recognized.

OTOH with duplicate communities, the content gets divided and conquered a little bit better. One userbase can browse new on one community, while another userbase can browse and curate content on a similar one. In the end, both communities content don't get drowned out by the massive volume.

Once a multireddit like feature comes out, users like you and me can identify and group these duplicate communities and be none the wiser browsing all of them at once.

Does your town have only one coffee shop?

There could be any number of reasons. For one, you can avoid power-tripping mods that ban people they disagree with just because they can. Even though they chose the same name, different communities might have different purposes or rules. Just find the ones you like and subscribe without worrying too much. Everything is federated so it doesn't matter.

This gets asked often in both this community and across the Lemmyverse. Please continue an existing discussion instead.

You find one that matches your preferences, I guess. For gaming, maybe one community allows memes, and another doesn't, for example.
I don't think Lemmy is supposed to be a 1:1 match for Reddit, with power mods and big monolithic forums (where you see a post with thousands of comments and wonder what the point of contributing is).
I started a community, and I'm treating it as a sort of fan blog that other people can also post to, it's not supposed to be the definitive place for discussion to happen.