is creating an echochamber by blocking or muting people [...] ?
Yes, but that's 100% your right on the Fediverse. If you want an echochamber, that's an option for you. If you don't want that, then you don't have to create one. It's not the default option, but it's an available one. Some people don't want to have their beliefs challenged online; maybe they get enough of that in their personal lives and just want a place that's less antagonizing toward them when they're spending their time on their phone or whatever. Or maybe they're not here for discussion in the first place, and they're just here for caturday pics.
It's not for me, but I can understand the appeal of it. Personally, I start to get a little irritated when I keep seeing the same things over and over, so I try not to block people unless they're actively being a nuisance.