It's funny you mention gmail and hotmail. That's exactly my point. Who is setting up their own email server when they could instead sign up for one of those? Is it even 1 in 100,000 email users?
(I say this as someone running my own email server, who periodically has problems sending to gmail.)
> Who is setting up their own email server when they could instead sign up for one of those?
About the same number of people who set up their own WWW server, modulo the absolute PITA that is email.
Still, federation between GMail, Hotmail, iCloud, Yahoo, ProtonMail, etc does work. You don't have as many choices but it can still feel overwhelming if you're shopping for an alternative. People at Corp & Co use their @corpnco.com addresses daily. My personal email is connected to iCloud, but I can always point my MX elsewhere. Running your own Mastodon instance is costly - however fediverse already leans on smaller interconnecting communities.
Nobody sets up an AS just to run some fiber to their home. Decentralisation and federation just happen at different levels and scales.
I would count is as decentralized enough if there are a few major players, you have Google, Microsoft, I assume Proton Mail works fine though don’t know as I only use it for burner accounts, iCloud Mail including Apple’s cool private email relay thing. (Maybe other countries have big providers I dunno.) You can use your own domain and switch between providers if needed, and use custom email clients… it’s all the benefits of decentralization to the end user.