I strongly disagree with this decision -- as lemmy progresses and stabilizes, open registrations will become normal and just blocking open instances will not be a viable solution.
I can't say if this is just a need for better mod tooling or a fundamental problem with federation, but it's certainly concerning.
This "defederate at the slightest sign of trouble" mindset is dangerous. It's not like sh.itjust.works endorsed that terrible community they just happened to temporary set up there before they were banned.
If you just block every instance that hosts a community you disagree with, beehaw will end up completely isolated. This isn't necessarily a problem, but don't try to pretend you're part of the federation at that point.