As far as I'm aware, it's client side only. It doesn't stop content federating to the piefed instance, because other people can still see it. As for why you can see posts, but not comments from a blocked user, I'd test that on the default piefed web interface and see if it works the same there. If piefed default hides posts too, then it's an issue with the app you're using. If piefed default shows it, then it's a question for the piefed dev!
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