And once again what stops the user from blocking them theirselves? People have the ability to block individuals and whole subdomains, why not do it theirselves?

What percentage of people have to be posting hate on a specific topic before a certain server decides to defederate them? I'm in no way advocating hate speech but what happens if you have a large server with just two instances causing trouble? The owner believes in free speech and doesn't want to block anything but there are dozens of other instances on that server that are behaving normally, with thousands of people using it daily? Do you block that server to your entire user base because of two instances? Do you make all of the other users on that instant suffer because of that? Or do you leave it up to your own users to make their own decisions?

Regardless of how this goes in the end I think the instance operators should have clear and open policies before people decide what servers they want to join to begin with.