It often works, but sometimes fails in very quiet ways. https://pawb.social/post/8422352 and https://yiffit.net/post/8267386 are the same mealtime video post (Technology connections kettle), but very different comment counts. I usually see it as posts or communities that just stop showing up even though nothing changes. The other day I played with the stories community here from a remote community, but nothing showed up until I made a comment on a post that didn’t show up initially.
yea federation can be weird sometimes.
I’m pretty sure it extends to users as well. It’s like a block of everything from a particular instance/domain. The blocked users can still see the post and interact with it, but anyone on the instance that blocked them won’t see their content.
I’ll have to switch to another instance next time I see comments from instances I know are defederated from the account I log into to be certain, though.