There's a clear character arc Martin goes through from episode 183 where he discovers he's an avatar with a domain to episode 186 when he actually reaches and passes through his domain, continuing afterwards on to London. This journey is meant to show and get Martin to realize he is not just an innocent bystander passing by the tortured and the torturers untouched. He has to choose a side and choose it consciously, admitting his strengths and weaknesses to himself in order to complete his journey.
In 184 he encounters a man who was made into an avatar and learns that people can end up becoming part of the 'bad' side because of circumstance and not because they are actually inherently bad or choose to be connected to the Fears. Alot of the time avatars are just people the Fears choose for one reason or another. Mistakes, manipulation, penchant for a certain feeling, a chance meeting, unforeseen circumstances. These are all ways a person can inadvertently cause others pain and even though there is a clear dichotomy between watchers and watched, there isn't one between good and bad. He also learns there is a choice and if he has Jon, he can choose to 'switch sides', a power most others in this world don't have.
In 185 he has an opportunity to utilize these lessons and admit he does have some power of choice over the fate of others given his position, that he's 'one of us' as jon puts it. He sees Not So Good people can also suffer and needs to make a choice whether to let them continue suffering or make them the torturers instead. He makes a choice based on his personal judgement and admits to having a very specific moral compass which does lean towards punishing the bad rather than allowing them reprieve and the tools to hurt others. But it's no longer passive. He has the power thus actively leaves another person to suffer. And comes to term with that choice.
Martin could enter his domain only after he admits to being one of the watchers and choosing to refuse the inspector's request. In his domain he talks about how he won't be able to continue living like that and that the fact that now he knows he's actively feeding off of other people's pain he can't go on if they don't find an all encompassing solution to the apocalypse.
He could have potentially changed all of the people in his domain into watchers but, as he learned, the balance would find a way to make them suffer anyway, like Jordan still does, and putting someone in that position is an enormous responsibility.
Having learned that his actions and choices have those kinds of consequences was imperative before continuing on to London to find Jonah in the tower and learning Jon can replace him and change the balance of things around. His lessons in these few episodes of good and bad, of responsibility and power, of the balance of the apocalypse and the pain it inflicts, influenced his actions and choices greatly going forward. He realizes that kind of power should never belong to one man and refuses to allow Jon to become that man and shoulder that kind of responsibility over humanity. He knows what it does to a person because he experienced it himself, even if it was on a smaller scale. And he doesn't want Jon to have to handle that kind of burden anymore than he already does.
Tl;dr: Dream logic and the journey will be the journey blah blah blah