There's always about 100x more people talking about the puritan servers that block the friends of the friends of the wicked servers than there are actual puritans.
So you're saying most Mastadon servers won't block servers that allow "TERF"s (a term which includes the very mainstream view that transwomen shouldnt be allowed in woman's sports)?
That opinion is the minimum required for the label. Any prohibition of transwomen from a woman's space is enough, though most "TERF"s will prohibit all pre-op transwomen from all woman's spaces.
Many Mastodon instances do block instances which allow transphobes, yes. However, it's very rarely _transitive_, is the point; few Mastodon instances will block instances which do not block instances which allow transphobes.