I think it basically looks like Reddit. You carve up the site into fiefdoms and then have users self-moderate. Moderation that happens at the site layer largely targets fiefdoms rather than users.

New accounts are easy to create, but new communities are harder because you have to wait for members. Plus most of your moderators are free. I wouldn't be surprised if Reddit only pays for people to moderate the default subs since advertisers and new users are more likely to see them.