I've never seen one block only one community out of an entire instance, but it's not surprising that they could. I'm assuming like an instance block, all lemmy.world accounts would be officially unable to so much as see new content from there, so no, it physically can't repopulate.
However, the admins will have to play whack-a-mole for a good while every time another one crops up and I'm getting the sense that unlike my fool's errand of blocking every sports community, they stand to be sued out of existence if they fail.
Maybe a bit rich coming from someone who doesn't have to pick up and move, but it's well-known to be an overloaded server anyway and after the initial Beehaw shock, the concept is really whatever to me as long as the fact that it's blocked is widely known. Probably new users will always have that shock, but mostly what it accomplishes is to encourage people to spread out and keep alts if they have too much FOMO.