Personally I don't really care that Bluesky is centralized, I actually prefer it since it's easier to use and there isn't the risk that my random server admin is going to go rouge or shut down the server like you get with Mastodon.
Twitter was pretty much fine until Musk started shitting it up so something that is pretty much like Twitter pre Musk is all I want. Bluesky fills that position well.
I see why people might say it but "Bluesky is centralized" isn't an especially accurate criticism. The protocol allows essentially any aspect of Bluesky to be decentralized, up to and including starting a competing service that still interoperates with Bluesky users—no permission required.
> Whereas with Mastodon, when you pick an instance you're essentially picking which benevolent dictator
Wait what? All of the benefits you mention for Bluesky apply equally to Mastodon (in both cases you can host your own thing if you like), and the latter (downside) applies to Bluesky when you sign up with the official server right? What's the difference you're pointing out?
I think they're both good, but different tools for different jobs. Mastodon is good for tighter knit community. I think Bluesky has potential to be a decentralized replacement for social media with n >> dunbar's number.
The difference is in the protocol. Bluesky's atproto is IMO very clever and well designed. It's not every day I read something and think to myself, "I wish I'd thought of that!" I'd encourage anybody whose interest is piqued to dig in and read up.