Yes, of course Bluesky is federated. The hosts hold onto your keypairs. The DID:PLC is a substring of your first hash.

For those of you who are interested in solving this my first suggestion is to read the Scuttlebot docs which are still up at: https://scuttlebot.io/

Sometimes I think about a retro Scuttlebot revival. If you want to set sail on this kind of project, contact info is in my bio.