Hmm yes that's what I thought too. It was nice on Reddit where you could choose where the report went, I hope they can implement something like that here.
I don't know how well that would work. I could see people being pretty confused by that. Like not knowing what an instance related issue is versus a community one. With larger instances it might lead to a flood of unnecessary posts going to the instance moderators.
I've just described where reports are going in another comment on this post, but to expand on that, reports on the same instance are shared between community mods on the same instance and admins, which means that even though admins may see your report, a moderator resolving the report can also do this in an attempt to avoid the report being seen by an admin.
There are already discussions about improving this experience in general, but this is probably going to take at least several months to significantly improve.
I made an issue on the Lemmy github for a solution to this problem. It allows for reports to be controlled by users just like they are on Mastodon. Would allow people to effectively bypass community moderators entirely, or bypass forwarding to remote instances.