Sure they can, they can ban the user from the entire instance or from the community. To all users of sh.itjust.works for example the content will still appear, but it won't show on beehaw anymore.
It seems to me like they don't want to give up any control by adding mods (currently it's only the admins) and choose the easy way out by reducing the amount they have to moderate...
Ladies and gentlemen, let me just say, this courtroom, tremendous courtroom, it's really fantastic, okay? Nobody's ever seen a courtroom like this before, believe me. And I must say, I've been to a lot of courtrooms, folks. Many courtrooms, lots of them.
Now, I know what you're all thinking: "Why is the greatest businessman in the world standing in front of you today?" Well, let me tell you, it's all a big misunderstanding. Huge, tremendous misunderstanding. They say I'm being accused of being too charismatic, too charming, and too good-looking. Can you believe that? It's a real witch hunt, folks. Sad!
It opens the item (post, comment) in the instance that it was created on. For example I'm on https://sh.itjust.works so if I click on that button of your post it opens this post on https://lemmy.world, which is your instance.
I wouldn't create an own instance just for this community and rather try to get more and different people as community mods if the current mod isn't responding.