Yeah everyone using Cloudflare is definitely centralisation, but maybe a kind of centralisation that allows for easier switching to something else if Cloudflare gets too crazy.

DDoS is a war of attrition - and the best way to win a war of attrition is to make it cost much more than $1 to make you spend $1, and to be able to outspend the attackers (e.g. the whole community bands together to support the victims against the attacker). I think the best response depends on who is attacking.

Network level DDoS is likely using stolen bandwidth - but the person directing the attack is probably paying someone for the use of it (i.e. they didn't compromise the equipment themselves, someone else builds botnets and rents them out). If you can identify what traffic is part of a DDoS, you can track down where it is coming from, and alert the owner of the network where it is coming from, which hurts the person providing the services to the attacker quite a lot. If I have a reputation of: if you attack me for someone else, I'll cost you a significant part of your business that will take you months to build back up, then you are not going to offer that service cheaply, or even at all.

Application level DDoS usually relies on amplification of cost - I do something relatively inexpensive (like send a packet opening a connection), and it makes you do something really expensive involving databases, disk IO etc...; a good mitigation is to redesign the API to flip that on its head, so you do something expensive, and I do something relatively cheaper for you. There is an open issue about using Hashcash to do just that at: https://github.com/LemmyNet/lemmy/issues/3204 - the downside is that it forces users (even on mobile devices) to use more compute / power for every request to Lemmy, but I think there is a balance that can be struck there where it isn't too bad for users, but makes that type of attack infeasible.