Some Utopians converted to Christianity and received baptism, the community of good as practised among early Christians especially appeals to them. Since there was no priest among Hythloday’s crew, they could not receive any other sacraments, although they were very eager to. They were even discussing selecting a bishop among themselves, without waiting for a priest to arrive on their shore. (That of course would be highly irregular according to the Catholic creed. In a few years, when the Anglican Church splintered off from the Roman Catholic Church, the question of the apostolic succession, i.e. whether the consecration of Anglican bishops and by extension, all the priests, is still an unbroken line from the times of the apostles, would be one of the most hotly discussed issues between Protestants and Catholics).
Other Utopians let them be, except for the one guy who got too eager and started offending other religions. He was punished with exile because of creating public disturbance. Utopians believe in absolute religious tolerance, because they think that perhaps God is pleased by the multiplicity of religions and that’s why he allows it. Moreover, their approach to religion is “let the best one win”, through example and rational discussion, not through force. (Again, that would not be the position of More himself, who in a few years would support burning heretics). Utopians hold in contempt people who do not believe in eternal life and God’s Providence (so essentially atheists, although the word is apparently too scary for More to write), but they don’t persecute them. They do not give them any public offices because they believe that people who are not scared of hell can’t be trusted, but they let them be, thinking that you just can’t force yourself to believe in something you don’t believe. They don’t let them spread their views, but they are encouraged to discuss them with priests and intellectuals, because they might bring them round.
Utopians believe that if people die unwillingly and in fear, it’s because they are scared of the afterlife, and deservedly so. The funerals of such people are melancholy and quiet. But the ones who die calmly, are apparently those who are pretty sure of going to heaven, so they are carried to the cremation place with singing and joy, as they are in a better place now. (Hythloday doesn’t explain the difference between the earth burial and the cremation, and whether they depend on the manner of death.)