I think its going to end up a successful move for them.

They built a platform. The users built the site over the years with minimal interaction from reddit.

They now have a platform, millions of users, and full control of what they want on that platform.

The writing has been on the wall for a while now, they want the traffic but don't want the problems that come with mostly community driven content.
All the profile redesigns, ability to "follow" users, profile pics, awards, all that has been an indication of the direction over the last few years. The last few steps was to kick out the problem users and be left with those who don't really give a shit and just want to see memes on their phone while they take a shit. The people who hear about reddit and just grab the official app from the store. The people who don't care about APIs and protests and modding or accessibility tools. Just eyeballs to look at their ads.

Those people will stay. It doesn't matter if 25% of the community leaves, because the natural growth in the next few months from the eyeballs will claw it back over time.

Once they have an obedient user base who are strictly bound to what reddit want them to see, think TikTok or facebook users, that's when they will see off. And it will pay off handsomely.

I think people would be surprised at the amount of instances that have already been broadly defederated.

Its just that the beehaw defederation is the first "big" incident since broader adoption, and thats for very understandable reasons with a roadmap to refederation already in place.

The only people who get angry about an instance being defederated are the types who want to act in bad faith. They know if they join the instance they got defederated from they will be banned if they spruik the shit that got the instance defederated in the first place, so they are angry that no one wants to listen to their shit.

It sucks for legitimate users that get caught up, but if youre a good user willing to participate in good faith, just join another instance and carry on.

I dont see why defederation is seen as a sensitive topic.

Its a great feature, designed for specifically this purpose.

Over time people will migrate between instances and land where they fit. Some people want to be abrasive cunts, and they will land with the other abrasive cunts. Thats great, they have an instance they can do what they want on.

For the rest of us though, we dont want to see their bad faith articles and abrasiveness on our feeds. No one is being limited in their speech, but they might be limited in their reach. If they want to expand their reach, they can join a more broadly federated instance and ditch the bad faith arguments and abrasiveness.

Its the kids table at the dinner party. You can join the adults table if you behave in a way that is suitable for the adults, if not go back and play with the kids and everyone is happy.