Yes. How I understand it they're trying to run a curated safe space over there but are finding current moderation tools insufficient to moderate the influx of users on certain instances. I believe it was connected to those with no registration verification.
They've said they don't want to do it, and once they're feeling able to take better control they will re-federate.
And, that's entirely their call. If their users want access outside of their walled garden they can make an account elsewhere. If people currently defederated from them wants access, join an instance still federated.