Instances are not shadow banning, they all listed in instance list page.
I didn’t get the mod drama thing. I guess this guy mixing instance admins with community mods.
Also, I don't think there is that much blocking between instances except Beehaw, since they want to create a refined user base.
Edit: what I was telling here is only applies to Lemmy. Looks like things are different for Mastodon side. So this comment may have a realistic view. I just don’t have enough experience on there.
On Lemmy, it's shown. On Mastodon, instances are given the ability to hide their blocked instances which IMO hinders people's ability to join. A lot of the drama on the fediverse with regards to blocking is from Mastodon and similar instances.
People claim the instance you join doesn't matter because "everything is federated!" but it kind of does. It strongly affects the people who will see your posts and even who you can follow, and if you don't know what an instance is blocking it creates an air of uncertainty. I've seen instances get blocked for stupid at best and downright malicious at worst reasons, so the 4chan post isn't inherently wrong.
The largest instances all block many other instances and they are all in favor of federating with Meta as well.
To be fair, a lot of the blocking are of instances that are causing lots of moderation problems, since they post things that upset many users.
Most users actually prefer a walled garden experience so they don't have to see things that upsets them. As long as they feel the walled garden has sensible rules.
This site lists the ones that are and aren't federated with Threads. I don't know of a complete list of all the instances and all their federations, though.
It kinds of works like shadow banning because defederation means one instance doesn't get updates from the defeded one... but the defeded one can still be federated with the one that defeded them, so users on that can still see and comment on posts, but they aren't displayed to people using the defeded instance. So they're just posting into the void. But people on their instance and I guess other instances can still see them of course.