A mod can correct me if im wrong, but my understanding is that, yes, it goes to all of those people

Ive reported a comment before for breaking a community rule, only to have the user banned on my own instance but not in the community or community instance. Which means they can continue interacting with my comments but I can’t see it or respond to it.

Intuitively, it makes sense that if a user is breaking a rule, it should potentially run all the way up the chain - but sometimes the community rule is far stricter and sometimes the instance rule is. Imo they should make this a little cleaner