Custom lobbies don't meet the same need. That's for playing with your friends, or at least, people you vet yourself. Community servers are a sub-community in of themselves: people tend to play on the same servers on a regular basis, allowing you to build rapport, community norms, and have substantially more direct moderation than company-run servers.

Yes, sometimes you run into power-tripping moderators. That comes with the territory of having moderators. But the upsides, of being embedded in a usefully-sized community, and having nearly constant human moderation, not to mention the whole "stop killing games" of it all, far outweigh the need to shop around a bit for a good server.

I think the ideal middle ground is something like Squad's server system: The developers offer a contract to server owners, establishing basic standards that must be met to be a recommended server. Rules forbidding the crazy bigotry that milsims tend to attract, minimum server specs to ensure smooth gameplay, an effective appeals process. If a server meets those requirements, and signs the agreement to keep meeting those standards, they get put on a "recommended" server list (which 90%+ of the playerbase exclusively use). Other servers go on the "custom" server list, which can be modded, or spun up for certain events, or whatever.

All true, but of course you're missing the player agency component that renders those issues moot. If any of the above happens, you can simply find another server.

Private games (now called "custom lobbies") were available back then too, they're not equivalent to a public server browser.