Space domain awareness (SDA) has become increasingly important due to the rapid growth of commercial space activities and the expansion of New Space. This paper examines the need for transitioning from centralized to distributed SDA architectures, highlighting the limitations of traditional centralized systems in scaling with increasing satellite nodes. The analysis demonstrates that centralized architectures, which rely on individual downhaul, struggle to maintain efficiency as the number of satellites grows. In contrast, distributed architectures offer enhanced scalability, coverage, and resilience by processing data on orbit. Specifically, a low Earth orbit constellation capable of performing data analysis and response formulation on orbit can reduce routing times from 60 to 9 ms, providing an order-of-magnitude improvement in performance. The study applies this analysis to Starlink, OneWeb, Planet Labs, and Jilin constellations, demonstrating the advantages of distributed approaches across diverse satellite systems. This paper also discusses the tradeoffs between centralized and distributed architectures and provides key considerations for selecting the most appropriate approach for scalable and resilient SDA systems.