You're right, for intra-cluster calls where failures are scoped between the node itself and the infra around it, per-instance breakers are what you want. I wouldn't suggest centralizing those, and I might be wrong, but in most of these scenarios there is no fallback anyways (maybe except Redis?)
Openfuse is aimed at the other case: shared external dependencies where 15 services all call the same dependency and each one is independently discovering the same outage at different times. Different failure modes, different coordination needs, and you have no way to manually intervene or even just see what's open. Think of your house: every appliance has its own protection system, but that doesn't exempt you from having the distribution board.
You can also put it between your service/monolith and your own other services, e.g. if a recommendations engine, or a loyalty system in an E-Commerce or POS softwares go down, all hotpath flows from all other services will just bypass their calls to it. So with "external" I mean another service, whether it's yours or from a vendor.
On the feature flag point: that's interesting because you're essentially describing the pain of building circuit breaker behavior on top of feature flag infrastructure. The "switching back" problem you mention is exactly what half-open state solves: controlled probe requests that test recovery automatically and restore traffic gradually, without someone manually flipping a flag and hoping.
That's the gap between "we can turn things off" and "the system recovers on its own." But yeah, we can all call Openfuse just feature flags for resilience, as I said: it's a fusebox for your microservices.
Curious how you handle the recovery side, is it a feature flag provider itself? or have you built something around it and store in your own database?