Default instance blocks should largely replace defederation
Since what content users might want to see is quite unlikely to match which servers the admins tolerate, choosing instance on the Fediverse can be quite complicated, which is inconvenient and off-putting for new users.
For this reason, and simply that the Fediverse is stronger united, I believe defederation should ideally be reserved for illegal content and extreme cases. If Fediverse platforms would allow instances to simply block the rest for users by default, the user experience would be the same, unless they decide otherwise.
Although I don’t think Beehaw blocks sh.itjust.works because it has content that they are uncomfortable hosting. The main reason is (as usual) the comfort of their users, but to help the Fediverse as a whole, instance blocking might be a more constructive approach.