There is no small group of administrators that meets up to decide what everyone can see. Every instance can on their own decide what they see and what not. The larger community doesn't have a "council of true moderation", most instances just tend to have common rules like "be nice to eachother" and "don't be racist", so the larger network is fairly cohesive.
It's also untrue that an instance you run will be like phpbb, even if you don't get federated by larger mastodon instances, there are plenty of instances that federate with anyone who's not hosting illegal content or spam. And you can join those instances if you don't want to host.
This is free speech as a principle; nobody has to host you and you get an audience of poeple who are willing to listen. Nobody who doesn't want to listen has to listen. That second part is integral in true free speech.
And I would also point out that Mastodon or Pleroma work just fine federating small networks, they don't have to be "censorship networks", which I think is begging the question a bit.
It’s even more insidious than the power that Reddit moderators have because at least you can see that comments were deleted.
A platform designed specifically around federating giant censorship networks has nothing to do with free speech. The only free speech their is that someone can setup their own instance, but that’s no different than phpbb, which doesn’t make such a grandiose claim about free speech.