Until someone puts a bunch of kiddie porn up there. If there's not a reasonable way to take it down, that's a huge issue. Then the absence of censorship might lead to it's downfall.
There's plenty of kiddie porn on facebook, instagram, twitter. They hide it other images or scramble the images themselves to fool filters.
Or did you think that magically goes away because it's centralized?
GS instances have ways to block content instance-wide. So spam and porn filters can catch items and prevent all users on the instance from seeing it.
I don't know if ActivityPub specifies things like that in the spec yet, but moderation is of course a huge factor in the success of the fediverse. Lots of work is devoted to it.
Incredibly, nobody needs to be censored. The offending poster can be reported to authorities and handled from there without ever having to tell a user what they can and cannot post.
You're handwaving away things again. Other services are not relevant for this. We're not talking about them. If PeerTube gets the reputation for being the place with kiddie porn, no other creators are going to want to go there.
"Incredibly, nobody needs to be censored. "
This is flat out not true. Kiddie porn and spam, for instance.
"The offending poster can be reported to authorities and handled from there without ever having to tell a user what they can and cannot post."
Except you're still telling people what not to post. The problem is that you're not allowing for a way to prevent that in the first place.
