Can't say i feel like i have fully wrapped my head around this solution, but having migrated Mastodon instances before i see the need for it, this could help a lot as mentioned. And in addition, lots of people usually have multiple accounts across Fedi ("Here's my main Mastodon one, here's a Lemmy one, here's one on Bookwyrm to rate books, here's a Pixelfed one, etc.") and this could help unify them which is good, "I'll log in with this account on this server i had never seen before and it just works".
That said, having either repeatedly seen (or occasionally, personally had) TERRIBLE experiences in the past with linked accounts on commercial platforms (like when somebody gets their Gmail account banned for whatever reason and suddenly their whole online life is halted down to banking, or when linking two unrelated accounts lets one company access to spy on the person much deeper than before, or many other cases) i have to say that i feel a visceral level of discomfort at the possibility of this coming to Fedi, even if i feel this might just be paranoia I'm still not sure what kind of power would bad actors gain over you in this setup, like admins of rogue instances, Big Tech spy-happy corporate entities once they do fully arrive here, hackers who suddenly have a magical key over everything yours, etc.