If an instance is defederated with another instance that all content in and out is ignored after the point at which instances defederated. So, in this example, you might see old lemmygrad.ml posts in your lemmy.world instance. If you comment on one of those posts, only other lemmy.world users will see it, meanwhile none of the lemmygrad.ml users will see it. Likewise, none of comments/posts that have happened after the instance defederated will appear on lemmy.world.
It’s akin to having a conference call/speaker phone conversation. Everyone in your room can hear and speak. Likewise everyone in the other room can hear and chat too. When the call drops (defederates), each room can continue having conversations on what they were just talking about but neither room has any clue about the other’s conversations.