As far as I understand, this isn't quite right (unless it's changed recently).
If A defeds B, then A no longer sends new posts to B, accepts comments or posts from B users, or receives new posts from B. Any comments from B users on A's old posts (made before defederation) are no longer acknowledged by A.
I think A users can still interact with B's posts, but then I haven't seen any beehaw users in forever. So perhaps not?
C can obviously still interact with both A and B posts normally. On posts from C, both A and B users can still interact.
So, in short defederation creates a hard wall preventing interaction between A and B. The only way A and B users can interact is on C.
It's unfortunate as beehaw would have benefitted from a uni-directional defederation (i.e. preventing .world users from posting on beehaw, but not preventing .beehaw users from posting on .world. Unfortunately, it's both.)