This is my understanding:

Every instance is like an email server and every account is like an email address. I'm NAME@lemmy.sdf.org and you're NAME@lemmy.world. I think where people (and I used to) get confused is with how Communities play into this. Both of our instances have a "cats" community. And we both can see and post to each others "cats" communities. Our community could have a rule that also allows dogs, and your community could prohibit dogs. So, when you post you have to follow the rules of the community that you're on, and those rules could be influenced by the instance admins themselves. So, kind of like how subreddits operate. So, the instance and the community moderators can control the content that is hosted on their own instance. So, you can have an instance that moderates only what's happening on their own server, and that's it.

Now, if lemmy.world decides to de-federate from lemmy.sdf.org, then as far as you can see, the other "cats" community doesn't exist, I don't exist, I can't communicate with you, and you can't with me. And the only reason you would do this is to make the moderating job easier. If you want, you can disconnect from from every other lemmy instance and then you don't have to worry about outside people coming in and having to also moderate what they say on your forum, but then it changes from being an open forum to just being a "friend group".

Also, I think the problem of "reddit supermods" is repeating. Lemmy.ml and lemmy.world are the two largest instances and at this point if they choose to de-federate from a smaller instance, it can basically kill that instance. And it can also be used to control the narrative. There are a few people making choices for many.

You can block users and communities yourself. Go sort by "All" and start blocking everything you don't want to see again. After a short time your feed will be cleared up.