If a "FUSE to replicate SQLite" solution came from anywhere else, I'd be quite skeptical, but there is a lot of very interesting tech coming out of fly.io these days and Ben certainly knows this space well. It still feels a little like a hack and piercing of layers of abstraction (less so than, say, litestream).
I love it when at first glance it isn't clear if a project is a crazy idea from someone just goofing around vs a highly leveraged crazy idea that will be a foundational part of a major technology shift.
I suspect it's the latter and the strategy though is to layer this on top of litestream to create an easy way to use sqlite transparently in a widely distributed multi-node environment (litestream providing the backups and/or readonly replication to remote sites, with LiteFS handling low latency local access in a cluster, POP, or data center).
Cool stuff. It will be fun to see where fly takes this :)