The instance blocking feature you speak of only blocks communities, it won't block users from the instance, it says this right on the change log for 0.19 on join-lemmy.org

Users can now block instances. Similar to community blocks, it means that any posts from communities which are hosted on that instance are hidden. However the block doesn’t affect users from the blocked instance, their posts and comments can still be seen normally in other communities.

So the deep cultural and behavioral problems with these instance aren't solved by this instance blocking implementation like everyone says, it can't be considered a replacement for defederation or moderation. I really hope that people, especially Admins realize this before making decisions to refederate, otherwise it could end badly.