Did the admins of each instance configure this, or does it occur because they are all public and each instance fetches data from everywhere else
The softwares can federate with whomever by default, so your second thought was spot on.
The reason I’m curious is because I’m wondering about building a read-only instance for myself.
This is a perfectly valid reason to stand up your own lemmy/kbin server. I'm considering the same thing myself. An instance like you're describing would certainly need far fewer resources compared to a public instance, just keep in mind that you'll need to set up and maintain it on your own; not a huge task for a single user, but it's a task.
And to be a bit more clear on the terminology, you're considering setting up an instance that has new user signups and new communities disabled, but with federation still enabled, correct? If not, than disregard everything in my last paragraph.