This was discussed in the early days of federation and the consensus was that a block should be a hard-block as most likely the offending instance isn’t contributing in a good way on 3rd party communities either.

However it looks like the allow-list is less strict and lets comments from non-allowed instances through if they are on 3rd party communities. But I have not confirmed this myself.

correct, beehaw and sh.itjust.works users can both read and post to communities on lemmy.ml, but they can’t see eachother’s posts or comments (because the beehaw admins defederated from sh.itjust.works).

btw, I (as an admin at lemmy.ml) am deleting this post from asklemmy because it is a lemmy support question.