"the company looked at the history of social media over the past decade and didn’t like what it saw… existing companies that are only model motivated by profit and just insane user growth, and are willing to tolerate and amplify really toxic content because it looks like engagement… "
First: Start here. Short version: The developers thought that bad actors would use Lemmy to host hate speech, so they hardcoded a slur filter. Developers claimed racist/sexist trolls wouldn’t be able to figure out how to disable it (?) and thus wouldn’t use Lemmy. Some insight here re: how the developers view Lemmy and their overall approach towards realizing that goal. Not going to link every discussion that splintered off of this one, but search/click related issues. We can argue the effectiveness of this specific implementation, but it’s a clear sign the developers have at one point intended to apply their biases in code regardless of whether it benefited the larger fediverse.
Second: Lemmy.ml - the second most popular lemmy instance - is running a version of lemmy programmed to hide specific communities via a fake error message. This link throws an error, but this one doesn’t, meaning sh.itjust.works federates with lemmy.ml but one very specific community (meanwhileongrad) doesn’t.
First: They did actually end up removing this and making it configurable, check the bottom of the page. In a vacuum, the idea to stop cut-and-clear racists and trolls from using Lemmy is not something that’s too controversial. Sure, they are being hard asses about changing their mind and allowing instance owners to configure it themselves (and I’m glad they changed their mind). But there’s a big overlap between passionate and opinionated people, so they have to be at times to ensure a project doesn’t devolve into something they can’t put your passion into anymore.
Second: I mean… what do you expect? In the issue above they actively encourage people to make their own fork of Lemmy and run that if they don’t like something from the base version of Lemmy, so I kind of would assume they do as they preach. Instance owners also have the option to block communities without defederation. Lemmy.ml is basically their home instance. If anything this is a reason not to make an account on lemmy.ml, but as long as that doesn’t leak into the source code of Lemmy, who cares?