The Fediverse is dominated by hackers, who by their nature are incompatible with existing systems such as capitalism.
It's an absolutely massive instance that's a net negative for the Fediverse. It completely defeats the purpose of federation. The Mastodon devs used to drive people to smaller instances but decided they wanted to be /the/ instance. They made themselves a default in the app. At around the same time other instances started getting a crap ton of spam from them that ate up a bunch of moderator's time on smaller instances. The Fediverse only works in regards to moderation because there is less users per admin, but mastodon.social doesn't have that advantage. A bunch of people defederated from them as a result which was a good thing for the instances that did it. They failed pretty hard at communicating during this time as well.
Having one instance hold a large part of the network is bad for everybody involved. Defederating from monoliths is a healthy thing for networks to do. Building your own web beats any algorithm, can't do that if you're already federating with 99% of people.
This is a good thing. We don't want another mastodon.social situation.
As much as mainstream social media is bad, there are online communities that are strictly necessary for some groups. Banning social media would stop closeted queer youth from participating in communities that would support them. Asking your homophobic parents about queer sexuality, for example, is a one-way ticket to getting your ass out on the street. Asking a community of fellow queer people anonymously is more viable. As toxic as social media can be, it can also be a refuge for good people who need to escape the real world and the consequences of it.
It really is an all-or-nothing approach. Either we make systems that are effective enough to stop everyone, or make them ineffective enough that they can be bypassed.
We should be helping young people navigate, and have a healthy relationship with it. The technology reflects and caters to the negative parts of the society it exists in. The best thing we can do is make the world better in the first place. Body-negativity isn't here because social media decided it must exist, it's because an algorithm decided that appealing to the existing negative thoughts and beliefs of people gets engagement. The only other way to deal with this problem is to dismantle capitalism so that organisations that run these platforms aren't perpetually seeking profit at all costs.