That's one of the main points of federation, if you as an admin don't like an instance you block them, if as an user you don't like the instance you're in you go to another one.
There are some key features missing here, the ability to silence entire instances so you don't have to defederate completely and account migration so you can just pick up your stuff and leave.

We'll see, I guess. It's very early days. Reddit could be like that in places already. On the other hand, there were subs that were pretty open-ended, like r/askreddit (although I'm bummed they're not blacking out).

I suspect users will flock to instances that are more trusted if given the choice, since nobody wants to be left out.