They have defederated as a moderation step, not as a technical step. Large instances with open registrations were the source of several trolls that would spew hate, get banned and then simply re-register.
There is no moderation tool to deal with that aside from limiting sign-ups, which the instances in question were unwilling to do (which I get, because manual approval creates a huge workload).
In order to keep their community as safe as possible, Beehaw defederated, because they prioritise community safety over community reach.