I'm happy to let people I don't like have their own websites. I don't want to be forced to let them use mine to post about how I should die.
One company moderated their content, they were found liable for libel in user content in court. The other company did not moderate their content, they were not found liable for their user content. Anecdotally one of these services was seen as the good one and the other as the crappy one because of their moderation policies.
While social media didn't exist at the time in its current form, I'd argue this is still very relevant today. Without section 230 websites would only be able to moderate for illegal content, and there's a mountain of stuff you wouldn't want to see online that isn't technically illegal, and a lot of people who will try to put it in front of you if given the oppurtunity.
The concern is that absent Section 230, a provider needs to either be (almost) totally hands-off or they have to strictly moderate (which isn't really viable for the modern web and social media).
There already exists laws that act very similarly to what people are proposing.
Specifically these laws are called common carrier laws, as they apply to phone systems, for example.
Do you believe that the existing laws, that apply to phone networks, are tyrannical or worse or bad?
I don't think it is unreasonable to consider how our existing laws, that most people find reasonable, such as the ones that already apply to phone companies, could be updated to the modern era, so as to apply to newer communication networks.