While I agree with your general point, I think it's wrong to characterise this as "not being able to post your dick pic to Facebook or whatever". This isn't about posting memes; it's about freedom of expression. It's about preventing, say, the Hungarian government labelling George Soros as a terrorist, and subsequently prevent you from making statements online that agree with him.

Sure, suppressing freedom of expression is not a good way to suppress freedom of expression - but this is a serious issue.

(Though, as mentioned elsewhere, it's still early in the process, and hopefully the regulation can be altered before it is passed.)