I was on an instance that limited mastodon.social, which means you don't normally see posts from there, and anyone on there that wants to follow you needs permission. But if you follow people there, their posts will appear normally in your feed.
Because of its size, I think a lot of instances are hesitant to defederate completely... (but that's part of the problem with having such a big instance). I think quite a few limit it though. Some instances list all instances they limit/block and might even have a reason why they do it, but some don't seem to have any info about that at all.
I moved to an instance where it wasn't limited. Haven't noticed a huge difference, either in terms of increased activity or higher levels of abusive posts/bad behaviour.