The level of censorship is going to be different depending on your instance and where you are posting to. A lot of instances are managed by individuals or small teams out of passion. They can do as they please and don’t have to pander to everyone for commercial appeal like Reddit or Tumblr. If someone doesn’t like what they’re doing they can join a different instance or create their own.
Instances can defederate from each other over these differences. A lot are defederated from the instance Exploding Heads because of their alt right content for example. From what I understand you can also report content to the administrators of your instance if it goes against their rules and I think they can remove it from appearing on your instance (or block the user that posted it). This isn’t going to stop it from appearing elsewhere.
I also wouldn’t say it’s sketchy. It’s just the overall political leaning of a lot of Lemmy is relatively left leaning and having those measures in place kind of demonstrates the vibe the instance is trying to create.