That doesn’t sound reasonable for a lot of reasons. The idea that each family can host their own instance (which still has costs, and as you reasonably pointed out can’t generally be done with a server in the basement because of broadband laws preventing that kind of usage, is kind of ludicrous. That would lead to an internet where only people with money would be able to host a website of any kind. And even then, public services (video hosting, cloud storage, news, any kind of public service or so on) wouldn’t get anything out of the deal so why would they let you connect to them and mirror their content?

Also, if we keep things small scale, social networks die because new people aren’t coming in to replace dead accounts as people leave. So what happens then? Those social networks die. Social network sites like Lemmy and mastodon and so on need people. Without people to post content and people to consume it the site is basically just an empty husk of random 1’s and 0’s.

Keep things responsible? How do we do that? You’ve given me an outline of an idea you have but it’s all broad strokes and no details.