I understand what you’re saying but i have a different idea.

First, user accounts should probably be federated. Or federated accounts should be easily identifiable versus non-federated. Federation is pretty easy if you tie it to google, Facebook, Microsoft saml/openid. I’m fine with those options but I understand how others may not.

2nd, I think magazines should be collapsed until they are not.

For instance, pics.kbin, pics.lemmyworld, and pics.reddit2 should show up as the “pics” magazine. If kbin decides to defed, their content now appears to everyone as pics.kbin.

This adds a layer of abstraction that only appears when it’s relevant. Users could of course decide to display this info if they wanted, but by default it wouldn’t show up.

Moderation is more difficult, but I think federation has a place here too. A magazine could decide to federate, and the mods, with federated identities, would then be able to do the needful across instances. If things don’t work out they could defed their magazine.

Is this similar to the global DNS network? There would need to be a protocol to exchange and keep the list up to date

not sure that solution is a good one for this environment. I'm new but from what i've seen the concept of moderation is different and your solution is trying to engineer a reddit-like moderation design to an architecture that is fundamentally not reddit-like. Moderation here is at the instance level, not the community level.

This would be excellent if done right. What I am curious about is, where this will be implemented? On the protocol level in activity pub or with each GUI (mastodon, pixelfed, lemmy, kbin etc) need to individually implemented it?

Don't take this the wrong way. That sentiment is either autistic or authoritarian.

I can't form an opinion right now.
If all similar communities appeared combined into a single community I'd still be likely to want to still filter out sources.
But at the same time sometimes a place to see them all together sounds appealing.
It seems that I want both, but probably what we have now is the most flexible, forcing less limitations.