In my opinion this is what kills the fediverse. When instances block other instances, you just fragment the whole thing. I think what is needed is a Proxy. What do I mean with that? I can host a read only instance. This way I can control what instances I want to access and which I want to block, but this instance doesn't host accounts or posts. I would still need an account with a regular instance. The proxy instance would allow multiple accounts at the same time, so you don't need to worry about to change accounts or URLs, just to see a few other communities.
The whole federation thing is quite neat, but you need so much information beforehand, to choose your "right" community. Of course there are some very isolated instances, that do get blocked by most regular instances, but between the regular instances, there are quite some differences. For example some instances forbid NSFW. Hetzner (server hoster) does not allow NSFW in their ToS and a while back, a lot of instances used Hetzner. Some instances got surprised by that, because they didn't read the ToS.
Also I have the fear that when some governments could make the life worse for instances and make them accountable for other instances, that you can access through their instance. As an example could be the age verification, that some countries do require now.