There are instances full of actual Nazis on Mastodon - that we can choose to refuse to interact with those instances (yes, I've blocked a nazi instance on my instance) does not prevent them from talking amongst themselves or to people who want to talk to them.
Censorship is not refusing to listen to people we find abusive. People are not entitled to force me to listen.
A federated platform is far more resistant to censorship than X is.
How is it not censorship if you are making the decision for not only yourself, but others, too? It sounds like saying bleeping swear words on TV isn't censorship because you just don't want to hear bad language.