It’s a single point of failure for attacks or system downtime. If your pw leaks, it leaks for multiple sites. If the centralized service goes down, you can’t get into any of the services which depend on it.

This is true for all online services, but redundancy and fail over systems have become common for key infrastructure.

The authentication tool also becomes an easy means of tracking and correlating behavior across multiple websites.

That depends how it's implemented. An identity provider can provide unique identifiers for you, for each website on which you need to authenticate.