There’s also some sort of soft blocking option, which largely hides the instance AIUI but still gives the ability to follow users. This seems like a better option rather than completely defederating.

If Meta want to scrape your data they can do that anyway. All defederation does is stops you looking at their stuff (which, as you say, can be blocked at the user level anyway)

And that’s how it should be. In my mind the ideal social media is a complete wild west that has it all but also comes with tools that allow users to tailor the experience to their personal liking instead of having someone else do it for them (unless that’s what they want)