It's nominally a personnel/time issue. It's easier to defederate with rapidly growing instances than try and keep tabs on the flood of posts which are coming in from them. Lemmy.World, at least for a time, was still federated with some shitstances, also out of manpower limitations, and beehaw decided to just take their ball and leave. It's the way federation works and is entirely up to them, just as reddit raising api costs and kicking moderators is within their rights. Your server, your rules. We can argue whether it's the best way to manage and build a small platform, but its the state of things at the moment.
disc: I'm a member of lemmy.world, as well as a smaller lemmy instance and kbin, both of which are still federated with beehaw.