Been a while, but as far as I can recall, SJW and LW are the two largest instances and the decision was due to limitations with Lemmy's moderation tools and wanting to provide a safe space for their userbase (the latter being their primary mission). BH doesn't have a huge admin/mod team, so they chose to limit federation with some of the larger instances. I also think I remember reading that federation was never really Beehaw's goal and is more a side effect of the platform (Lemmy) they chose to run for their project.
May be a bit fuzzy on the details, but I believe that's the gist of it.