* "Silence" it - makes posts invisible on your instance for everyone not following them * "Suspend" - removes all content. * Reject media files. Avoids downloading media files locally from this instance. * Reject reports from instances that are abusing the reporting.
But limiting an instance is often insufficient because it doesn't stop your users from then subsequently replying etc. and indirectly dragging the conversation onto your server, and doesn't stop the remote instances users from harassing your users. And so it's often users pushing for harsher blocking.
In any case on Mastodon people have choice - if you don't like your local admins mod decisions, you can move elsewhere and take your followers with you, so if anything mods have far less power on Mastodon than most places.