@vedmid

When a user blocks a domain posts from the domain are hidden from the user.

When a server blocks a domain all users on the instance can't see anything in that domain. You server no longer fetches replies or posts from that domain, even if some of your users are following people there.

Now the other issue, can they see you

Like twitter all posts are public. but people logged in at the blocked domain won't see you-- but they could still use a 3rd instance to see the posts.