Default instance blocks should largely replace defederation
Since what content users might want to see is quite unlikely to match which servers the admins tolerate, choosing instance on the Fediverse can be quite complicated, which is inconvenient and off-putting for new users.
For this reason, and simply that the Fediverse is stronger united, I believe defederation should ideally be reserved for illegal content and extreme cases. If Fediverse platforms would allow instances to simply block the rest for users by default, the user experience would be the same, unless they decide otherwise.
Admins need to make sure they do not host illegal content. They can not do that if they do not see the content so they would likely still have to look at all of it just for the benefit of the few users on their instance who change the default. Instead they could just defederate and not have to worry about that.
There are great sites like fediseer.com to keep track of suspicious instances. And if those users see illegal content they can report it to the admins.