Perhaps you are interpreting their request to not use username and site name and instead use email, to instead use a long form Lemmy username?
No, I was saying to use their Fediverse username and their Fediverse password. Sorry if I got misunderstood. Nothing to do with the actual email address used at signup.
To do so, there would need to be a centralized or federated list of all accounts
Why would there be? The app would just search for the domain name first (let's say "aussie.zone") and then your username (in your case "hitmyspot"). That's kinda how email works as well. What centralized database would you need to interrogate a server on login? It's no different than the current implementation, only that you do not need to remember the website first, just enter the whole username in one go.