> Why don't all the Nazis just make a Nazi instance and go there so we can block it?
They want to maximise eyeballs reached, even if they aren't friendly eyeballs. Favourable responses seed them with further hostility, slogans, etc., and provide reinforcement of a sort. But even unfavourable responses just strengthen their persecution complex and make them that much more fanatical. Their audience is larger when people find it difficult to block them or refrain from doing so to avoid collateral damage.
I think this is the reason for the scorched-earth approach other instances are taking. Just like fire needs fuel and air, ideologues need both a stage and an audience. To stop the marketplace of ideas from burning down, you can remove one ingredient or the other to disrupt the conflagration. Local mods can deprive bad actors of a stage, but if they don't, remote instances will deny them an audience.