Basically if you block both left and right wing hatred and CP you're alone in the Fedi lmao
The Fedi is like 4chan but worse, and normies think it's going to be better than Twitter even though it's worse in literally every aspect that they're upset about Twitter: petty censorship by server admins, horrible content, and identity verification are all -worse- on federated networks
Whether that's good or bad is a different discussion, but the fact is that it's resulted in some fairly aggressive federation policies. In general, people on mastodon are pretty okay with this because they value their personal safety and comfort over "free speech" ideals.
The thinking is that your instance has the right to moderate and federate however you want. Having posts from your server federated into mine is a privilege and totally at my discretion. If your server federates with hate speech servers and you don't intend to change that, I'm going to block you to prevent anything from the hate speech server from reaching mine.
The overall goal is to protect users first and allow free speech second. Mastodon users want a safe and friendly place to have fun and hang out. It's meant to be a place to escape from free speech hellholes like Twitter.
So servers defederate quickly and aggressively. Whether or not defederating from your server causes you problems is very strictly a "you" problem. The safety and comfort of users is paramount.
Go to any large instance, hit up their about section and look at their list of banned servers: a good chunk of them have ban reasons like "'free speech' server that federates with gab and other nazis", etc.