They're certainly shitty instances. They're free to block them if they want, since you can always just fork the source and remove that bit.
But I don't think that the project is associated with any particular instance that it allows you to log in to. They're taking a definite negative stance. They're associating themselves, just as anti rather than pro.
Personally, I think it's a little silly. Despite the term being overused (and not even being a bad thing usually), its a classic example of the annoying kind of virtue signaling. Doing a silly little thing that makes no difference at all while trying to make yourself look good to peers. It's like they want credit for taking on the "extremist" instances, by doing a bunch of nothing other than some mild finger waggling.