Here are the issues for me:

The fediverse is still below an active user threshold that makes it an effective replacement. I'm not saying that it needs to match reddit's size to function, but I joined reddit about 6 months before the digg v4 migration, and it felt more alive then than the fediverse does now.
Much of the activity here seems to be about the reddit protests and migration away from reddit. This, combined with activity below a threshold necessary to make it feel like an effective replacement for reddit's core functionality is a little off putting. (Yes, I realize I'm in /m/RedditMigration, but I'm subscribed to a wide variety of magazines/communities and reddit migration content still dominates my subscription feed) The fediverse needs to show that it is capable of supporting itself with actual content, and I don't think it's proven that yet.
I still don't feel there is any fediverse instance which feels as clean, elegant, and unclaustrophobic as the old.reddit.com UI. Whether that's just my own aversion to change or a legitimate comment on the quality of old.reddit I'm not sure, but there are some aspects of the UIs that are unquestionably rough, like full page loads which could be replaced with AJAX.
The UX in general is a little rough in ways. The entire way the fediverse works is a little intimidating. If you're just looking down the barrel of the kbin registration form that's not a big deal, but if you need to choose an instance, or you're subscribing to communities/magazines and you you see 3 different communities with the exact same name, things can get a little overwhelming.
The jargon which has developed around the fediverse is kind of awkward. Needing to differentiate between kbin and lemmy, magazines and communities... even just "fediverse" is a little weird.
Even if all of the above problems are fixed, I wouldn't see myself abandoning reddit, just due to the sheer size of its activity. However, I would be likely to use reddit as a readonly site.

I think most of these problems have relatively straightforward fixes. As for the UX issues I'd like to see two things:

an instance which combines communities/magazines into "hubs" which users subscribe to simplify the UX. Users could can then tweak their hub experience by toggling which instances feed into their hubs. So instead of having kbin.social/m/news, lemm.ee/c/news, lemmy.world/c/news, etc... you just have something like /h/news and you can configure what's included in /h/news. The mods of the instance's community would determine which communities feed into the hub by default, but users could customize this as they wish.
Better cross-site user and reputation management. I'm not sure exactly how to make this work... but if, when you created an account on once instance, every instance its federated would somehow reserve or automatically create a matching account for you, then the anxiety around which instance to join can kind of melt away. The different instances could become windows into, effectively, the same account and same system.