While I understand your wanting to ban such a community, I think moving away from that type of action is a good thing. It's all about personal freedom. I have some instances blocked already but I would never decide to do that for everyone because what gives me that right? Speak out against them. Make your views know. Denounce, Rage, never quit. But never censor. Freedom of information and choice is the end goal. Banning a topic is what leads to radicals because they have no outlet for their insanity.
By "ban" they mean defederate from. They're not banning an instance from the Fediverse, the instance that's defederating from the other one is just choosing not to interact with or have to see them anymore. So your rhetoric here is misapplied, because one instance defederating from another isn't silencing the latter for anyone else but the instance that made that choice. It's not analogous to restricting freedom of information or personal freedom at all, on fact it's precisely an exercise of personal freedom: freedom of association! It's more equivalent to just leaving a club and never coming back or hanging out around them anymore. Yes, it's done on the whole instance's behalf, so it effects more than just one person, but thats why random instance members can't defederate an instance they don't run from another instance, there's a decision procedure to make sure it represents the wishes of the instance as a whole.
It's not censoring, they can still go and subscribe to something even if it's defederated afaik. It's just not shown by default, which sounds like a great idea for instance owners that want to protect their users or curate the overall atmosphere. Or they just create an account there if they disagree with the decision.
I agree. A bad opinion/agenda that is denounced with logical reasoning and compassion will do far greater good than simply censoring. The potential future followers of that bad opinion/agenda would maybe be swayed by a superior view point if they saw the majority of comments were opposed to it.
You can limit yourself to Local, which will only show you communities from your own instance.
Also, when you see a clear case of someone acting in a shitty manner you can report them. This report doesn't just go to the community's mods. It also goes to all the admins of all instances involved (your and their accounts', and the community's instance) as well as to the top admins. But be warned that it's not anonymous (your username appears in the report).
You can also open a discussion with the admins and users of your instance. Your admins can block other instances, but that will apply to all users of your instance.
I'd suggest just to be patient though. Usually fascist instances tend to get banned and defederated.
Or you can find an instance that is already defederated from the problematic one.