Functional though, you could just open your start menu and find what you wanted immediately instead of typing to search for it like I have been doing for the last 5-10 years
That is correct. Your instance needs to defederate from the other instance to also block comments/users.
User-based instance blocking is actually just hiding posts from that instance. It does not hide or block comments made from users of that instance on posts that are not coming from that instance.