What does defederating actually do?

Now with all the discussion going on about Facebook joining the fediverse and what to do about it many people seem to be advocating for defederating with them thinking that they're going to grab all your data and this is the only way to stop them.

I'm not especially educated on the subject but my understanding is that this is not at all what defederating does and also I don't think that's going to stop them from getting the little data that's here publicly available for anyone anyways.

I'm trying to get my head around the entire concept of the fediverse but it seems like there's very few people who actually understand how it works and these people seem entirely absent in these popular threads I'm reading.

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