It’s true that instances don’t need to grow exponentially (or at all), but most mods/admins want to maintain their community and not see it dwindle down to nothing. People used to interacting with instances run by Facebook or other corporations (which most of their friends or family will use) might get upset if the federation link with them gets severed. If they do, they’ll either pressure the instance admin to comply with the corporations and federate with them again, or switch to the corporations’ instances. Both of these scenarios are bad for the future of the fediverse.