I'm not so sure. I talked to some people who knew about threads, a couple even had accounts. These are not tech oriented people. Moreover, I quite often see memes/screenshots of bluesky posts right here.
Make of that what you will. I have no numbers or anything, but it seems like they're not as dead as we might think.
They arent dead, but they are in the millions of users, not hundreds of millions.
That is enough to sustain a social media platform, but none of them fully have the network effect going for them yet.
With federation, hopefully they won't need it. That can be the network effect once interoperability is really here. Then everyone can still communicate, but not be beholden to any one service/owner/etc.
AT protocol doesn't federate the way ActivityPub does. There are separations between how your dat is stored, how it is aggregated, how it is filtered, and how it is displayed. Each part can be hosted separately and federate differently with separate instances of each part. The aggregation part is the thing that is most critical and there are probably some limited independent instances of that, but BlueSky has offered no support in facilitating this beyond making their peices AT Protocol compliant. You van take what BlueSky built and try to run your own instance of the aggregation service but they provide no documentation or support. You could also build your own, but that's difficult and I don't think anyone is trying.
So it is federated, but pretty much no one is interested in doing the work to federate with the primary infrastructure.
Well, what's a popular server? Are there several big ones? Sorry, but I really don't understand why the answer isn't turning up in web search results.
PS: Are you sure it isn't just people who've done the "set your domain as your handle" thing but even so are still on the central one? Because even if they have made some small progress towards decentralization they absolutely have not gone so far that there isn't still a central one.
Further searching turns up the information that "federated" Bluesky PDS instances are limited to ten user accounts each, and API usage limits which may constrain things further. So that would explain why there aren't any big ones.
So far as I can tell they do all still "federate" through the central server, not directly with each other. So there being not much point in it may also explain why it hasn't caught on.