Ordinary people made great use of the internet - but failed to make it really decentralized. Thus the enshittification of Reddit, Youtube, social media, and so forth

I don't think one is related to the other.

Decentralisation doesn't affect enshittification that much. Look at Lemmy and Fediverse in general - it's federated... so what? The .world instance is by far the largest in the Fediverse. If the mods there go insane, like they did on Reddit, or if the admins decide to add monetisation to it... it just happens. There being other servers changes nothing for the users stuck on the .world server. Sure, they can create new accounts elsewhere, but that's - in principle - no different than switching from Reddit to Lemmy.

On the other hand, look at Steam. Valve, the creators of Steam, has no "decentralisation" of their product, they're the god emperor of everything in terms of how Steam operates. At face value, it's the same exact product as, I don't know, the Epic Store, and yet Steam is loved by gamers, while Epic is hated.

No, you can have centralised and not enshittified services just fine - as long as the goal is to provide the service, instead of "creating value for the shareholders". As soon as that element comes in, there's no stopping enshittification.

We can choose to embrace local LLM that is fully under our control, or cede ownership to the 1% forevermore.

Agreed.