It's a post-Snowden world, so I can't say I'm surprised nor that I think it's ridiculous. I also strongly suspect that EU will follow the suit shortly.
Just talk through them and then ask yourself if they are in fact "not present" outside of Russia given all the NSA and GCHQ shenanigans that have surfaced.
This is all about their ability to censor and has nothing to do with the stated reasons (combating piracy / protecting the privacy of Russian citizens and other fig leafs).
If you want to know the real motivations for this then it helps to remember Putin's origins and articles like this:
Is UK included in "the rest of Europe" by any chance?
Besides if the censorship were the goal, then it's perfectly doable as of now and regardless of the physical location of the servers. Just ask Saudi's. To understand the motivation you have to stop reading Washington Times and looking at Putin's origins and instead consider what he has accomplished in recent years - he essentially resurrected the national pride. In this context, it's only logical that they now view their dependency on (mostly) US companies as unbecoming, especially in the light of Snowden revelations, hence the move in question. You may also recall the hocus-pocus Visa did not long ago by showing a middle finger to some Russian bank as per directive of the US department. Now, swap the US and Russia and consider what the US reaction would've been.
If you are thinking it's all about censorship, you are missing a much larger picture.
The UK is in many ways more of an extension of the US than a part of Europe and behaves accordingly.
What the US's reaction would be if the situation was reversed is moot because that's not the world we currently live in. The fact is that Putin and his band of boyscouts are rapidly reverting to type and getting the communications between Russian citizens under their control is just another step in that play.
If you think Putin has restored national pride then you are falling hook, line and sinker for the propaganda, that's just cheap talk for the consumption by the gullible. Pride you achieve by having something to be proud of, this is just warmed over nationalism.
Outside bubbles such as HN and others on the internet, the post Snowden world doesn't exist. What you'll see is just grandstanding as it was with Germany. There is no benefit to the EU or rationale to take similar measures.