Aspix had the winning comment on this article.
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They're trying to distract from the fact that an admin account (/u/ModCodeofConduct) screwed up royally by forcibly changing subreddits that had gone NSFW as a protest back to SFW without their knowledge, exposing advertisers and children to any adult content that had been posted there in the interim. This move also opens the site up to significant legal liability -- up until now, admins just enforce sitewide rules and leave specific moderation decisions to subreddit mods. By purging mods for their actions (which were fully justified under the content policy) and making direct editorial decisions about what subreddits can and can't be about, they're taking responsibility for what subreddits allow and potentially losing their Section 230 liability shield. The administrators are in panic mode and making rash decisions to quash the protest that could potentially destroy the company, even apart from the damage they're already doing to community morale.
I don't think applying what's basically extra moderation will impact section 230 compatibility. Plenty of other social media companies have paid moderators and that's basically what reddit is doing here. It's bullshit that should drive users off the site, but I can't see how it's any different from the fact that admins could always set content rules and enforce them.