Not sure why nobody in the comments is distinguishing between blocking a community on an instance (removing /c/piracy) and defederating instances (saying your users can't subscribe to otherinstance.com/c/piracy). They are very different things. We should be very skeptical of defederation.

Removing a community because it violates the rules of your instance is A-OK and every instance should do this. Anybody can run an instance, and anybody can set their own rules, that's the whole idea of federation.

De-federating other instances because you find their content objectionable is less ok. Lemmy is like e-mail. Everybody registers at gmail or office365 or myfavoriteemail.com. Every email host runs their own servers, but they all talk to each other through an open protocol. You would be pissed to find out that gmail just suddenly decided to stop accepting mail from someothermailprovider.com because a bunch of their users are pirates or tankies. Or blocked your favourite email newsletter from reaching your inbox because it had inflammatory political content.

Allowing your users to receive e-mail, or content from subcommunities on other lemmy instances is not a legal risk like hosting the content yourself is (IANAL etc). Same way Gmail is not liable if somebody on some other e-mail server does something illegal by emailing a gmail user. That's why you can register at torrentwebsite.com and get a user confirmation email successfully delivered to your inbox. Gmail is federated with all other e-mail services without needing to endorse them or accept legal liability for them.

Lemmy's strength, value, and future comes from being the largest federated space for link-sharing and other forms of communication.

De-federation is bad.