alt Hacker NewsMastodon isn't doing anything similar!
Mastodon is just a bunch of isolated copies of the same app talking to each other. There is no notion of a shared identity, each server's admin is effectively a king over your account, etc. It's a fragmented patchwork of isolated sites that forward messages.
With AT, there is just one global network. Like the web. You don't post "to" someone's isolated copy of an app. You post to your own folder, and every interested app can aggregate your post.
It's a bit like email vs RSS. Very different shapes.
To give you a concrete example to ground it. Blacksky is a fork of Bluesky. They're setting up their own server with different moderation policies and are unbanning some people that Bluesky has banned (https://bsky.app/profile/rude1.blacksky.team/post/3mcozwdhjo...). However, Blacksky posts still exist in the same "world" as Bluesky--they are not an isolated fragment.
Thanks to AT, Blacksky and Bluesky are just two different prisms through which you see a single network. Whereas with Mastodon, every app is its own network, with some limited message passing between them.
I understand the technology of course. In fact, it's clear ATProto is an instantiation of data spaces, a tech developed in the EU for industry purposes. However, while in industry there is pre-existing need for interoperable "data product marketplaces", it doesn't translate to social media in the same context.
There is no pre-existing need or desire for people to put all their data into a single space - that part is entirely driven by social companies themselves which of course benefit from that kind of centralisation and interoperability. So yes, the prism is that our social interactions become a data product and more - a data product "under governance", well structured and with well defined schema, etc.
For end users, functionally, there is very little to be gained (and some things to be let go) but the technology is not accessible enough for non-tech folks to decide on the tradeoff themselves.
As for Mastodon, what you call limited currently includes editing posts, long form posts and private blocklists (among others), all features Bluesky lacks and current version of atproto does not allow. So let's not try to quantify/compare them like that.
Regardless, I like the idea overall, I believe the Solid project (https://solidproject.org/) addresses a similar concept but when less dependence on a single authority as is the case of Bluesky and ATProto.