Yes, this is how federation works and it’s the main point all those users that are bitching about the move do not understand. LW does not care about piracy, they are afraid of legal consequences, because with the federation protocol you are hosting all content of other instances. It’s not embedded, it’s mirrored, so there is no legal difference between the origin instance and the federated instance.

Just FYI, while I do not disagree with you, the sort-by-hot ordering is bugged in the current lemmy version, which causes threads not to “cool off”. It will be fixed with the next update (fix is already done, just not shipped yet).