Close. There is nothing illegal (in the US) about creating your own currency as long as it is convertible to USD. With domain names there is no such requirement to interoperate with the existing root nameservers and ICAAN tlds. In your private .com there is no requirement that the facebook.com A record map to facebook IP addresses so you could collectively decide to map it to 127.0.0.1 and no one could do anything to stop you.
That's like saying anyone could open their own Facebook, and therefore Facebook is not centralized.
The DNS is centralized, even if domain names are used in conjunction with decentralized protocols like TCP/IP, and even if anyone is free to create their own instance of a DNS.
The only sense in which it's decentralized is in relation to the legal right to operate one. It is a free market institution, instead of government-instituted monopoly.
