Fascists can set up an instance, sure. The difference is that that's one instance among many. The worst fediverse instances aren't federated with anybody because the entire instance has been blocked by virtually every other instance.

IMO that's much better than even the best monolithic social media site. A monolithic site has to have a set of rules that applies for everyone. You can add your own additional blocks, but you can't unblock things that the monolithic site has decided should be blocked.

By that logic every website on the Internet is fascist because someone set up a website about fascism somewhere.

Mastodon is still federated and while there are going to be some instances run by bad actors the majority of them aren't as bad. From what I understand at least mastodon.social is defederated with the bad instances anyway so we can't interact with each other but I may be wrong I'm kind of new to this type of platform