Yup. Mastodon has this issue. Can’t pick a big generic instance because it could get defederated for spam/being too normie; can’t pick a small instance because it could get defederated over some ridiculous drama [1][2].
Normal people (and even some not-normal people) don’t want to deal with that. “Instances” are a bad model.
[1]: https://tootworld.social/@lilythelonelygirl/1143999833553083...
[2]: https://tau-ceti.space/@lo__@mastodon.social/114394202556951...
Yeah mods of an instance have the power to do so for the sake of their users (in their view at least).
Your comment also implies their actions affect all other instances just by seldomly doing this action. Which isn't the case.
We can cherry pick all day, but one cannot take the whole Fediverse down like it happened with Bluesky. Which is the topic at hand.
I don't think the instances themselves are the problem. It's rather the whole defederation mess. If this had been left in the users' own hands rather than the server operators, it wouldn't have been an issue.
After all email is very federated and it works fine. And people have no issue grokking it. The implementation matters.