@shantini
So, speaking as a moderator of your instance, you are on the right instance: we aren't blocking Threads unless they do something that actually causes problems, like if they don't fix their damn implementation by the time they try to query posts from us, or if they don't fix their moderation problems that are making people not want to be on their platform and it becomes our issue.
That said, I think it's not only entirely acceptable that other instances are blocking, especially these small, safety oriented instances, but it's actually how things were intended to be run from the design point. If they don't want to have to deal with the potential bullshit coming out of Threads, they shouldn't have to, and they have the right to decide that because it's their servers. That's the beauty of decentralized networks.
Threads doesn't have much to offer to the average user anyway, mostly ads and influencers: most of the interesting stuff is on Fedi.