Kbin user here, you can’t block an entire instance (yet), what the current domain block does is blocks all content linking to that specific domain. We can filter posts by languages in the settings (not sure if Lemmy has that feature) and block individual magazines which has been pretty good at helping me clear up my All feed.
The current kbin domain block doesn’t really work well as an instance block. What it does is block any post linking to that specific domain. It will block a nsfwlemmy user posting images to their own instance, but it won’t block lemmy.world or lemmy.ml user posts there as they link to their own respective domains instead. It also won’t block any post from that instance linking to a 3rd party domain either.