Each function/module requiring isolation must be in its own hierarchical block. The reason for this is that each module that has the isolation attribute set has the attribute applied to that module and its entire logical hierarchy (sub-modules under the parent module on which HD.ISOLATED property is set).
IDF has many additional constraint rules as opposed to traditional Partial Reconfiguration (PR), or hierarchical design flows from Vivado Design Suite User Guide: Hierarchical Design (UG905). It is necessary to define one key attribute for each module to be isolated to invoke the IDF rules to create isolated designs. As discussed in the above section, this attribute is HD.ISOLATED and needs to be set for each module that needs isolation for the backend Vivado implementation tools to use the IDF rules. This allows effective Floorplanning of an isolated design in IDF, and protects redundant functions from undesired optimization.