My current use case is I have an adguard home DNS filter that is currently blocking some lemmy servers. (eg: lemmynsfw)
I understand that it’ll cut out any direct resources from that lemmy server, but I suppose since it’s federated lemmy.world is acting as a proxy and thus the posts are still visible?
More generally speaking, is it possible to block an entire lemmy server at a network level? (DNS filtering or otherwise)
Nope, not from a DNS level. All the posts you are reading are cached by whatever instance your account is on. Basically the only thing served from the remote instance is full-size media uploaded to that instance. Even thumbnails are served from whatever instance you use. Mastodon/Akkoma/etc can be set up to even proxy full-size media for users, which is a feature I imagine will eventually make its way into Lemmy. Your best bet at the moment would be to find an instance that defederates those you don’t want to see (or run your own and do so yourself). I know “blocking” an instance is an often-requested feature, so that may end up a feature in Lemmy itself at some point.