I propose we defederate no instance other than those with egregiously illegal content such as CP. Note that I know of no such instances.
As of the moment of this post, the only defederated instance is lemmygrad.ml, so voting Yea would refederate them. It's a genocide-denying Marxist instance.
"Everything that is legal" sounds good in theory, but isn't great in practice. Holding instances to some reasonable minimum threshold is important to foster a community. We shouldn't set that bar too low (or too high).