Yeah, normally I'd say it's a bit extreme but honestly some of the instances basically don't care or only moderate for PR, and those instances absolutely should be defederated because they will be inevitably problematic for us and our communities.
Lemmy.world is a great example of this, they allow many transphobic and homophobic users to keep posting there, and if called out give said users a temp ban and remove comments, lots of times they won't even remove the comments (like one user claiming that LGBTQ books are indecent and should be banned, said comments are still up). They're basically like the Reddit or Facebook of the Fediverse, anything goes until it hurts PR, they claim all kinds of rules but only enforce those when they get heat.
sh.itjust.works is another one but supposedly they are trying to be better and they did actually listen to my initial community removal request I sent them instead of reverting it out of pettiness like lemmy.world's administration did, so in some regards I feel like defederation is too extreme, but in others like with lw not so much.