it may have the same effect but it's not the same feature. if you block domains, like you block magazines or users, you get to have an ensemble view of all those in your user settings. that kinda make sense.
and I can't find where the instances defederated with your technique are listed. maybe you know where?
edit: syntax
EDIT: this doesn't block the instance, but only the domain. new tool coming soon, confirmed by the main dev:
domain blocking existed long before federation. It serves as a way to block sources like youtube.com, spotify.com. Blocking instances will be a separate option in the user profile soon. I will submit a pull request.