In effect, it is just that. It's inevitable for an nsfw-focused instance, or really any large instance, to have some comms that some instance admins don't agree with.
As long as it's legal though and admins are reasonable (which they were judging from the convo), defederating the whole instance without making it clear that it's a personal decision and not because it actually hosted anything like csam is definitely irresponsible, specially on a large instance. It definitely sets a bad precedent.
The issue isn't the defederation, it's that the instance is being presented as being at all fine with CSAM by blahaj admins, when it's actually very postive, and moderated well by reasonable admins judging by the convo between them.