One way to think of it is to think of each instance as a person/account, and every instance that they federate with is someone they follow, and anyone that they're defederated with is someone they've blocked.

So if one instance follows (federates) with another, that instances users will see posts and users from that other instance.

If an instance blocks (defederates) with another, it prevents the instance from sending or receiving any new posts or comments with the blocked instance, cutting all communication. In the case of Poast at the top of the list, 1474 instances decided to block it and prevent any new posts or comments from that instance showing up to their users.

Instances that aren't explicitly federated or defederated yet (unknown) are sort of in a limbo, they won't be seen at all by any users unless someone from either instance actively searches for a community from the other vir via a direct community link in the searchbox, then those server will follow (federate) with each other.

I hope that made sense, I'm trying to think of better ways to word this but I'm not sure if it's a good explanation or not.