How does bsky handle signups and keys? I would try it and see but sadly it's waitlisted.
Having spent most of my professional life implementing OAUTH and Single Sign on for corporations and schools, I understand what you're saying, but I tend to think that OAuth is the *old way of doing things, and the new way is bitcoin, keys, GPG, browser extensions, signatures. Eventually if we train them enough, they'll understand. If they refuse to learn, then the next generation will, or we will have failed yet again to create a decentralized web. I think it's way better than Oauth because it's simpler to implement the way it is now and the user has the responsibility of the key management.
That being said.. If you were to create an Oauth provider for nostr, you could generate and store the users keys, and allow them to "sign in with google" for example. Then you'd have to have a new NIP, that every nostr client knows about and provides this new option for signing events, where you make a call to an OAuth provider with the thing you want signed using a jwt token, and it signs it for them and returns it. Not the end of the world, but also, just feels icky, who in nostr would want to work on this when it's backwards from the ethos of nostr.
Jack's Web5, it's gonna require users learning something new. Kindof tired of hearing people can't learn, it's not true, they can learn. If it takes longer for them to learn and growth is slower, so be it, or we'll just end up with gmail instead of GPG. Eventually there'll be a reason for them to learn, and if that takes time, that's ok with me. I'd rather see knowledge progress, than take the easy way out by centralizing identity.