I would not let the pedantic details of what currently exists or does not exist bog you down.
You and I are saying the same thing. I am simply using language (read: decentralized government) to express concepts that don't exist today, but that may exist in some form or another in the future.
As you put it, this would mean eliminating parts of the government in favor of systems that provide it in a decentralized manner. While the resources, procurement of, or delivery of such goods and services might not belong to a centralized government, I think it is safe to say that it is a good place for a dApp to be introduced to mediate such public goods and services. In this sense, the mediation of goods and services would be centralized. In such a system, I would not want to have to deal with N number of dApps for N number of public goods. I would expect some sort of consolidation for certain goods and services into a single dApp.
So on the one hand, the gathering and distribution of resources would be decentralized. But the mediation of that gathering and distribution would be something consolidated, and in some sense 'centralized,' within a single or some small number of dApps.
RE: What if we used blockchain for... [Part 1 - funding public goods]?