am I browsing Lemmy right

To add to what @goat@burggit.moe said, blocking instances isn't necessarily a bad thing. The trick is to be on a server with a blocklist you agree with. If/when there's some kinda extremist alt-right instance focusing on finding and harassing people of specific ethnicities, for example, I'd be very disappointed if my instance didn't block it.

You don't. You will never be able to see their content or reply to their content. They may have already replied to you though.

It's why I prefer burrgit, no blocked instances here.