Yes, but arguably it was never very scalable for federated software to store large media. It gets utterly massive quick. Third party image/video hosts that specialize in hosting those things can do a better job. And honestly, that's the kinda data that is just better suited for centralization. Many people can afford to spin up a server that mostly just stores text and deals with basic interactions. Large images or streaming video gets expensive fast, especially if the site were to ever get even remotely close to reddit levels.

We need more decentralization, a federated image/gif host with CSAM protections

Maybe a system where the files federate after 3 upvotes from outside the original instance?