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I don't understand.
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Why? Doesn't that undermine the whole strength of the Fediverse?
Not really. If the admins of that instance don't want to federated, that's their prerogative. They'll gain or lose users based on that decision. The beauty of the fediverse is that it's all on a voluntary basis. If beehaw decides to federate with a small cluster of other instances, then they'll have their own niche just like the current internet.