If an instance were to leave the fediverse do we loose all its data? Say for example iPad Lenny.ml domain was seized or was forced to shutdown so we loose all communities from that host? Do we not see any posts? Can we still post to it? Seems like a big flaw if we have multiple large instances that can shutdown a significant portion of Lemmy.
If an instance goes down (permanently), federation of all of the communities hosted by that instance essentially stop. The content that has already been posted remains but anything new added to those communities only remain on your home instance. The only way for federation to resume is for that instance to come back online with the same domain it started with.