There’s nothing shady here, just kneejerk and protectionist.
Beehaw defederated because they they decided they didn’t want to actually moderate their communities. Easier to just screen everyone before letting them join, to weed out people they may potentially disagree with. Ostensibly to filter out hate but only a fool thinks it stops there.
Each instance owner is running these instances themselves, presumably out of the home, for free.
There’s no “but”. They could fight a lawsuit, sure, but that’s time consuming and expensive, and why bother? The piracy isn’t coming from their instance, why should they have to fight a lawsuit for it? Piracy has its own instance, nothing has been defederated, they’re just not hosting the content on their server to save themselves the hassle down the road. I can’t imagine they’ll be the only one.