So the user is banned from the instance where that label is seen (eg my instance)? Does an instance banning a user not block that user and their content from that instance? If not, what's the point of the ban?
Yes. It "blocks" the user. Afaik it should prevent the banned user from interacting with communities from the instance they were banned from and also the instance will no longer accept any new interactions from the user (local users cant see new content of that user, like PMs, comments, etc.)
Additionally, their content can also be removed, but that is optional.
That's an instance ban. Community bans are explicitly stated.
So the user is banned from the instance where that label is seen (eg my instance)? Does an instance banning a user not block that user and their content from that instance? If not, what's the point of the ban?
Yes. It "blocks" the user. Afaik it should prevent the banned user from interacting with communities from the instance they were banned from and also the instance will no longer accept any new interactions from the user (local users cant see new content of that user, like PMs, comments, etc.)
Additionally, their content can also be removed, but that is optional.