So let me get my head around it having SWAP.HIVE LP pairs allows for swapping between any token as long as theirs liquidity
Pretty much. It's a two-step process (TokenA -> SWAP.HIVE -> TokenB) though hopefully future UIs will hide the steps and make it look direct - or use a direct pair if it's a better choice.
So I can swap DEC for PAL because both have liquidity? Then what’s the value of having direct pairs?
Fewer RCs, less slippage, and eventually lower fees. Don't get me wrong, as a default, a token probably wants to first establish a pair with a common base token (e.g. SWAP.HIVE) to provide the most on/off ramps for their holders.
Also is their incentives?
Right now, no. Maybe there might be in future. I'd like to see an NFT issued to the pool creator that claims a very small part of the fees and the rest go to the liquidity providers.