I anticipated this type of reply that states that for HOAs there is not enough freedom of movement and diversity of "HOA flavours" to reap the benefits of this localist/federalist system. And you are right. The situation seems dire and the question is how do we solve this problem?
Do we do so by smashing HOAs (and giving the responsibilities to someone else)? I believe this is the wrong approach because it will destroy any potential for this localist (and thus inherently good, imo) system to heal. You're basically passing the baton onto another entity that might do a better job off the start but will inevitably fail because it is even less capable of evolving.
I'd rather try to discourage rigidity/complacency and incentivise innovation in the HOA-space which is much more complex to implement but better than smashing HOAs.
Regarding your point about "not buying the whole argument": I think it would be foolish to organise a military or pandemic-prevention-force on a municipal level. The levels need to exist and some higher levels have responsibilities that the lower levels don't have. I absolutely believe that this is good.
In conclusion, somehow communities of a certain region need to be organised if they want to be organised, especially when the region is densely populated. I'd rather organise these communities through self-emergent associations than top-down mandated government. And yes, the self-emergent association-type HOA is broken. I'd rather fix it than replace it with a inherently worse alternative.