So what I had to do was search for the community I want to block and block them from their main page. The settings page just shows you who you already blocked and lets you unblock them if desired. At least that's how it works on the web interface.
I hope that changes here before too long. Like yeah we can block communities (subreddits), but because this is the Fediverse, there's a whole layer of instances, too. And it's not uncommon for there to be horribly toxic instances floating around. It would be great to not have to wait for instance admins to de-federate from them.
I disagree with a lot of the content coming from that instance. The "why" isn't the point though. A lot of people would probably appreciate the ability to just not see posts from specific instances.
That works if I browse only my subbed communities, but sometimes I want to explore by all. It would be nice to be able to explicitly say "but not these instances."
So what I had to do was search for the community I want to block and block them from their main page. The settings page just shows you who you already blocked and lets you unblock them if desired. At least that's how it works on the web interface.