This is pretty shitty. Admins have been putting masto/mastodon in their domain names since the inception of the mastodon project. Mastodon (the software) doesn't have any way to migrate a domain so this screws any instance admin who's done that.
This is another example of why relying on a single implementation is not a good idea. Relying on a project with a BDFL for the majority of the #fediverse is always going to end up bad, especially a BDFL whose shown before that they care more about their project than the health of the fediverse.