To be fair I do not expect any privacy protections from lemmy/mastodon in general, or from blocking/defederation in particular.
Lemmy/Mastodon protocols are not really private, as soon you place your data in one instance your data is accessible by others in the same instance. If that instance is federated this extends to other instances too. In other words the system can be seen as mostly public data since most instances are public.
The purpose of blocking or defederation (which is blocking at instance level) is to fight spam content, not to provide privacy.