It just means that the decision comes down to the instance owner not the software developer, which I think is right. Everyone should be able to decide what their computer does, that’s important to hold on to.

It wouldn’t be a free software licence by the FSF definition (rule zero). Of interest the FSF rejects the original JSON licence because it contains the clause “The Software shall be used for Good, not Evil.” Since Mastodon uses AGPL, it wouldn’t be compatible.

That’s a really misleading headline; a Mastodon instance has done this, Mastodon as a whole can’t do this because it’s free software, it can be used for any purpose.