This is a concern, but luckily this isn't required. I set up hobbit.world to host my Tolkien related communities. It only costs $6 a month plus the $35/yr for the domain name to host a tiny instance like this. I don't need to depend on anyone but my hosting provider.
To be safe I should download backups once a month or so.
But the point is that for big communities that people put a lot of time into, there should be an instance for each one owned by one of the mods.
Edit: Meant to reply to the person concerned about the centralization of communities.
Even just a cronjob or scheduled task to download the backups to a machine at another location would be a big improvement. Then you can do it far more often because it's automated.
But personally I like to have both a copy on a PC and a cloud backup, in addition to the server.
Then just back up the other files in the volumes directory where Lemmy is installed (everything except postgres, which is what the database dump does).
The pictrs volume includes both the uploaded images and the image cache. I have no idea how to separate out the uploaded images so you don't have to back up the cache, I just back it all up.
I think you might just need to change the cds to go into the correct directory where the active docker-compose.yml file is, which should be in the folder called live