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But... if Waag are not self-hosting, and they're not, how likely is it that normal people will start doing so in relatively large numbers?

An important part of how this works is that you don't have to make that choice right away.

I've been meaning to move to my own PDS for a few months now. Still haven't. Whenever I decide to get around to it, it'll be fine.

I don't think that's the goal? If we got to the point where no service hosts the majority of accounts, that would be a pretty good milestone.

That would indeed be a huge improvement over the current situation, with 98.5% of repos hosted directly by bsky (!)