Exactly, when dealing with big data, you need a strategy to archive old data. You can't just store everything in one DB. Smaller instances may not feel like keeping all the date from all the time. Even big instances should have a mechanism to move old data do different databases.
The point of federation is not having to browse each instance seperatly. If each instance defedarates from every other, all you get is bunch of small Reddits. Defederation is a feature, but if you have to use it, to combat open registration (standard feature of every website), then something is wrong. Even if that wouldn't be the case, I see a lot of instances defederating, because they don't like users or content of other instances. Which makes you think, what was the point of federation in the first place?
Imagine any other federated service like emails doing it. You want to register on a website, but no, website defederated your email provider, and you are forced to use their email. "Oh you can just register multiple emails" is not the answer anyone would accept.
As I know, they defederated, because of open registration policy, here's a full post https://beehaw.org/post/567170. The point stands, federation doesn't work as of today.
Well, !beehaw.org defederated !lemmy.world, so by this logic, we're all nazis.