Federation is a two-way connection. Beehaw shut off the incoming stream, essentially, so anyone commenting or posting on spaces from that instance will not be seen by users logged into Beehaw. However, the outgoing stream is still active so anything posted there that you subscribe to or visit from another instance can still be seen. Users on other instances can even comment in those threads, but users on Beehaw would not see those comments.

For me it helps to think of the instance you are logged into as the place you trust the most. Content from other sources can always come in, but you can choose to simply not see things you don't want. This is a fundamental part of how the Fediverse works, for better or worse.