In this case though, would it not be that then if Facebook did have a processing agreement with Amazon with which they communicate information, and this agreement stipulates that (in order to comply with GDPR) data they sell to amazon must be deleted upon request, and Amazon does NOT do so, this would make amazon liable for breach of contract instead of facebook being liable for breach of GDPR?

If so, all fediverse instances would need is a copy-paste agreement when two instances federate that data from one must be deleted on the other upon request.

it can’t make it impossible. If facebook sold data to amazon, so now amazon has a copy, and then facebook’s user asks their data to be deleted, facebook can’t just march into amazon’s servers and delete the data themselves. The best they can do is send a formal notice to amazon requesting it be deleted, which sounds like what lemmy does. At this point it’s up to the federated server if they comply with the law…