Yes, but users should be able to manually whitelist defederated instances so they can interact with such an instance, if they want to. Lemmygrad shouldn't be visible by default, but if you really like communist tankie shit, you should be able to manually allow it I guess.
Replace "communist tankie shit" with "CSAM" or "torture porn" or such and see if that makes any sense to you (keeping in mind that all content from your "whitelisted" stuff is stored on the server owner's hardware).
Seems pretty simple. If you want to be able to see the content on an instance that everyone else has defederated from, create an account on that instance as well. Apps allow for pretty seamless usage of multiple accounts. That's the easy alternative to the constant "make your own instance and run it yourself response"
Federation isn't the same as "practically the same server". That's just Twitter or Reddit you're describing then, a single fully unified pot of information that is still spread out over a vast amount of individual servers for only for parallelization and redundancy reasons.
Federated applications like Lemmy are, as the name implies, federated. Not merged or unified or so.
E-mail is also a federated protocol. Imagine if every time you wanted to send an e-mail, you had to check whether your provider likes the recipient’s provider and if not, create an account at the recipient’s provider (if that’s even possible).
The main point of federation for me is access to more content without it being run by large corporations. If an instance gets taken over by a toxic group that is bot spamming advertisements or such I can move to another instance and the community lives on without having to find a whole new platform.
The way activity pub works is that a user subscribes to something and then the content gets copied to your server. If you allow a user to subscribe to whatever they want, then you're just going to get illegal content stored on your server.