Their reasons are much more selfish than that. They insist on only having 4 moderators while never scaling up, and they don't like how federation allows users from other instances to post on their instance because it disrupts their rigid ideal community vibe. According to their suggestions on "improving moderation tooling", the ideal federation setup is that their users can post on other instances, but other instances' users can't post on theirs, so they can save time on moderation work. The moderation work of other instance admins for their users doesn't matter, clearly.