Instances often block users or other instances because their users have asked them to do that. They often have posted guidelines about what they will or won't allow. Users will hold them to it. Users can and do block other users on an individual basis. If a lot of people are blocking you, the problem might not be them.
that's incorrect.
They report content they don't agree with. And if the instance owner shared that, the federated user or even instance gets banned.
Most prominent example is the Ukraine. Even if you post truthfully and in context, that the Ukraine did support the 3rd Reich with link to the Wikipedia article, you get banned, no warning.
So there is political censorship. And the fediverse is super political. The 3 big content areas in the Fediverse are politics, LGBT and nudes/nudes drawings including sadly CSAM.
Blocking (and reporting) an instance because of CSAM I can understand. But that too should happen at an individual level.