@hrefna one reason for blocking entire servers with bad moderation policies is to influence change, and/or to cause the "good" users to go elsewhere.
I think you're absolutely correct that it's a HORRIBLE tool for this right now with the way Fedi software currently exists and doesn't really make this visible, but it's the tool we have.
And that's only a secondary purpose; the primary one is to prevent more harm. Who's to say there won't be 200 users tomorrow, with 105 of them being bad?