Pretty cool, huh? I felt like I had cracked the da vinci code when I learned that. Not only does it forcefully federate the thread (if it hasnt already) it converts it like you said, also applies to comment links as well. It seems that some threads when a community is newly federated just don't automatically federate over, so you need to force it sometimes especially if there's a lot of content that's been posted since. Unsure the specifics but it's a lil wonky.

Knew this was a thing on mastodon but not Lemmy lol

Yes also works across software like kbin.