If Alice, a user of lemmy server A, subscribes to a piracy community on server B, all content of that piracy community will be pulled to, cached on, and served to Alice through their home instance, server A.

All it takes is a single user subscribing to a community from another federated server to pull that entire community’s data into their home instance. It’s bad when it’s a copyright violation risk. It’s massively scary when it could happen with something like child porn, because now whoever is running the home server is storing and distributing it unknowingly.