The example that introduced me to federation was like an instance getting overrun with Nazis, and everyone deciding to just cut that instance loose; let it float alone as "the Nazi instance" that nobody has to interact with.
I thought that stuff like bad actors and assholes was one of the main reasons for the idea of federation, really surprised how many people thought differently
I think the whole federation thing would do wonders on the anti-US-centric-bias end imo