As I understand it, Beehaw was basically being brigaded by spam accounts on Lemmy.world, and Lemmy doesn't yet have moderation tools to deal with that kind of issue. If what I read is correct, Beehaw and Lemmy.world both agreed that, for the moment, defederation is the least bad option.

Yes it does make things complicated. I think there may be a number of potential users intimidated by the complexity of the Fediverse. On one hand it kind of filters out the lazy ones which mitigates lazy posting, but on the other it makes growth more difficult.

However it's really only Beehaw causing the defederation drama (neglecting Meta of course). Most if not all the other instances block only for abuse or extreme content (like lemmygrad). Beehaw blocks other instances just because they don't like the looks of them, literally. They don't approve of the admin policy at lemmy.world so they blocked the biggest most popular Lemmy instance, boo!!!

Well as Lemmy users we do have some control. If we unilaterally disapprove of what Beehaw is doing we can reject them into obscurity. Based on the lack of growth in user numbers over there I'd say that's happening already. At one time they were top five in total users, now they're not even on the first page.