Yeah, they can do their thing. If you want to interact with their content you can make an account with them (if they let you in) or make an account on an instance that is still federated with them. If you go to beehaw.org, scroll down to instances at the very bottom right of the screen, then you can scroll the complete list of all federated and blocked instances.
This happened a few weeks ago when a bunch of people from reddit first started hopping over. They gave some reasons for why they were doing it. Like how they want to curate a specific type of instance, keep it smaller, they don’t want people that have very different opinions from them because they want a safe space, moderating was becoming a challenge. Some people from other instances were saying that Beehaw seems like they want a walled garden. It’s too bad because they had some good communities.
Beehaw is a Lemmy instance that defederated from a couple of large instances. Lemmy.world being one of them
Sure, I guess it could if every single Lemmy instance defederated them or vice versa. I’m still learning too.