You’ve almost got it. The thing is when you view content posted to another instance you’re not actually accessing the other instances, you’re viewing a copy of those posts stored on your instance. Federation works by distributing copies to all federated instances.

So if a big company like Google did as you said, and then suddenly defederated from everyone, you wouldn’t actually lose any of the content. All those posts up until the point of defederation would still be stored on every instance they were previously federated with. You would just stop getting new posts from that point forward.

There’s a bit of weirdness though, since the “true” post on the hosting instance is what handles syncing/distributing copies. So any new posts you made to those communities or comments on those posts couldn’t be copied back to the true post and then spread to the other instances. So everyone ends up with a desynced “ghost community”. So while you might see new posts/comments in those ghost communities from people on your instance, they don’t get synced to any other instance. (If you’re on an instance that beehaw.org recently defederated from, you can see that in action right now.)

So at the very least, the content would still be backed up, but you’re right in that people would need to “start over” and create new communities with new mods and new posts if they wanted the content to be federated. We just wouldn’t lose the old content.