If you search out @chat@pelago.1sland.social (ie., @chat) and click through to its profile page in your fediverse software (Mastodon, etc) you'll see the profile pictured here, but what you won't see is any of the posts below.
They are all Followers-Only. You need to be a follower first to see the posts below (and to reply and take part in the conversation).
Once you make your follow request within a minute or so and the profile confirms you are following them, you should see the posts below show up 'like magic', as your instance backfills the 'followers only' content (and grants your user access to it).
The content is on your server, but most fediverse software will prevent Followers Only content from being displayed on the web, externally linked, searchable or shareable by anyone except followers.
Where followers only breaks (as everyone here probably knows already) is that as soon as you reply to a followers-only post, you're bringing your followers into it.
The fix, ultimately, is just to rebroadcast, with everything owned by the group. That way, the replies all stay within the same group of followers.
That's why when you reply to a post from a Pelago group you should switch the audience from 'followers only' to 'private mention', to ensure that only the network sees your reply.