Both are important. When governments mandate back doors such as in EU chat control or US Earn it act, centralized services can be targeted much more easily than the thousands of xmpp and matrix servers running around the world.

Isn't that federated rather than decentralized?

What distinction do you mean? Federation allows for interoperable decentralization. Without federation, we would have thousands of chat/mail/social media servers that can't talk to each other. Some may choose not to federate, but most want to federate to create a useful protocol.

I always believed decentralized was if each user doubled as a server and required no external setup (example: scuttlebutt). Whereas federated was a plurality of servers with users communicated with each other but no central authority (email, mastodon, matrix, etc). However, reading some peer to peer literature like that 1500 page behemoth of a book, "Handbook of Peer-to-Peer Networking", it seems they are used relatively interchangeably..

the terminology we use in Matrix is:

“federated” = servers can talk to each other; eg email, xmpp, sip, activitypub

“decentralised” = data is replicated between servers; eg matrix rooms are replicated equally between the participating servers; usenet

“distributed” = data is replicated between p2p nodes; eg git, p2p matrix, bittorrent.

Either way it's a lot better than walled-garden style messengers like Telegram or Signal.