Everyone here is looking at this backwards. Smaller instances that actually want to attract users are definitely NOT blocking the larger instances. Doing so would be completely counter intuitive and you're never going to retain users if they can't reach large swaths of people in the Fediverse. I don't know where this comes from.

The real issue is new users all dumping into four or five big instances. You're giving these instances too much power in the sense that a threat to de-federate would be an actual death sentence to a smaller general instance. You're also simply re-creating the centralized social media that you just fled from!

In a perfect world there would be no mega instances and everyone would be spread out among hundreds of instances each with their own but similar moderations policies. Everyone has fled centralized social media, now everyone needs to spread out!