They don’t know you exist, but they don’t block you either. You would have to interact with the instance to be under “Linked Instances”. One way to establish a link is by finding a community on that instance you want to link by searching for them using this format:
You would need to manually do this for every community you want to see on your instance. If you never typed !asklemmy on your instance’s search box, your instance would never know that this community exists.
Or you can use a bot to automatially add them for you.