You will not see any content from a defederated instance, even if they were posted to another federated instance.

Every post and comment is initially hosted on the user's local instance. From there, it is federated everywhere else. If you're on lemmy.ml and post on a community in lemmy.world, then if you click the federated link (multicoloured weird shape icon) it will take you to the lemmy.ml version of the post.

Thus, if your instance is not federated with another, you won't see any posts or comments from users of that instance.

What's really annoying is the way that they use a unique ID number for every post and comment - each instance makes its own. So you can't just change the URL to your instance to find a specific post or comment. That only works at the community level, where the link becomes yourinstance/c/community@theirinstance. What we should have is consistent numbering with the same instance tag, so a lemmy.ml post would be lemmy.ml/post/12345, while others would be lemmy.world/post/12345@lemmy.ml. Lemmy is still very much a work in progress.

My understanding is that defederation only affects content that's native to the instance that was defederated. So in your example, users of instance A and instance C would be able to interact on instance C.

If a reply to you is non federated, then you get a notification you can neither clear nor read. That little ‘1’ will be there forever.

If the community is hosted on the defederated instance then I believe you wouldn’t see that post either. I believe the community instance reposts the post so that it can federate to all subscribed instances. And those might only be known to the instance that hosts the community. So everyone goes through it as a proxy.