Memes

Two things.

First, you can opt to follow that instance still, but I don't know why you would want to hang out with a bunch of Nazis.

Second, I liken it to cutting out a cancerous growth. If you have an instance infested with Nazis and those Nazis are not being stopped due to a lack of admin and/or mods or worse actively being promoted by an admin then defederate them to keep the Nazis from spreading.

Look at the incel and redpill movements that happened on Reddit. Failure to act quick enough helped the movements grow. They were vitriolic to most people but most of them didn't break any rules. They were destructive in nature and validated misogyny but Reddit didn't act until it was a very vocal and well established community on its platform. Now, even after closing down their major subreddits, those users who weren't the most extreme still actively espouse the values of those communities and have created new subreddits.

Or in this case Beehaw has some very progressive ideals, with rules that require a lot more active moderation, they can't handle the influx of everyone jumping ship from Reddit. Instead of leaving the gate open for people who will ignore the rules it's better to shut it and open a smaller "apply to join" door creating a protective barrier from individuals that may be Nazis.

In closing, I've both been a shitty redditor and seen shitty redditors and I appreciate that the fediverse has tools to decouple and recouple as needed. And again, if you like hanging out with Nazis that instance still exists and you can willingly hang out with Nazis.