Yes, this is still necessary.

It wouldn’t make sense to put the onus to block every bad instance onto every single user.

Consider the extreme use case, which is obviously CSAM. I rely on my instance admins to handle that for me. If I had to painstakingly block every instance that has poor moderation (or worse), I’d simply stop using Lemmy. The “all” feed would be utterly unusable.

Also, admins need control over what’s in their own database, potentially for legal reasons.