Instances don't work like they do on mastodon. There's not really a "dominating instance" in the same way. Heck, even within Bluesky's infra, there are multiple PDSes. Basically, stuff is layered in a different way (which the article shows the details of) and so talking about the structure of things ends up working differently.
> what's stopping them from strong-arming the protocol and changing how it works to benefit them?
This is absolutely a real concern. I believe they have shown themselves to be good stewards, and they also recognize this concern. As the ecosystem grows, this will be fixed.
> Better yet, what's stopping them from doing a rugpull and closing off their open service? What if bluesky decides 5 years from now that you aren't allowed to move your account?
This is built into the protocol! You can back up your CAR file and move it to another host without the approval of your current host.
> You can already export your settings and make an account on another instance
This doesn't work on masto to the same degree as atproto. You lose a lot of stuff when you move on masto, but it's 100% transparent on atproto.