There currently aren't many of those.
Due to the rate of federation being limited by latency, instances have actually been re-locating to mostly Europe, so they can more easily keep up with each other.
Basically, every federated event needs to propagate, but the next one can't be sent out before the last one is received and an aknowledgement comes back.
That means a higher latency makes an instance federate at a lower rate, causing it to fall behind. Eventually, some instances were having activity from .world show up with days of delay due to being on the other side of the world.
But since your point is mostly ideological/cultural, that doesn't really matter. You're talking about identity, not infrastructure.
Which kinda defeats your point. Geography doesn't matter. You can set up a finnish community on a swedish instance and vice versa.
And I'm not sure what you mean by "reviving democracy".
The fediverse is explicitly NOT democratic. It's run by a large group of benevolent dictators (admins and mods) who maintain the environment they and the users of their respective instances and communities desire.
They are kept in line not by votes, but by the fact that any one of them can be defederated by the rest, and they can all be supplanted by any one user with the desire to set up their own instance or community.
The reason Lemmy doesn't have local communities, is not structural. It's size.
There are some finnish communities that can just barely be considered active. But if you further divided that down to cities, you'd have maybe one post a year.