Afaik the current instance blocking just hides communities from showing up in the All feed, not users.
But nutomic seems to be right. There currently doesn't seem to be a feature request open for that. The issues I found contain several duplicates, mix different things and sometimes users erroneously file something in lemmy-ui or the backend and it gets closed. I'm going to have a closer look and maybe file a feature request. Thx.
Sure, that's not the point at all. But wouldn't it be great if the knitting community (for example) on beehaw.org, lemmy.ml, lemmy.world and feddit.de would be merged for me into one entity for a better browsing experience? And people wouldn't post the same breaking news 3 times and the cross-posts always showed up 3 times in my timeline? (And sometimes it's the same 30 people anyways that are subscribed to all of them so the cross-posting doesn't add anything?)
I currently don't have a good idea for a UI design for that. But I think a feature like that would add to federated platforms (if done right.) But nobody said you're not allowed or it's bad to open a dozen communities with the same name and topic on different servers. That's perfectly alright. In the real world we also sometimes discuss the same topic with different people at different locations.