I feel like we’ve had a debate on this before.

Are we having a debate? I honestly was not aware if so lol

This would just negate the concept of communities built up by moderators.

Correct. Moderators should not "own" the communication that goes on in "their" communities, they definitely shouldn't look at people as "their" users as I've heard some of them say before. We are just people. We are allowed to say things. The fact that letting people say things even if the moderators don't want them to, would do damage to their concept, is a flaw with their concept.

Also, in many case, instances have rules before communities. How does that system work here?

To a certain extent, it is cultural. At the end of the day, the instance admins can physically control whatever passes through their server. In the old school Usenet sense, someone who was in that role would never modify someone else's message. It just was this kind of wild fascism that would never be done except in the most dire circumstances (there were actually arguments about it when spam started cropping up, some people felt like even removing spam was going too far). Now, even someone who doesn't own the server hardware feels empowered to set "rules" as you say for what people are allowed to say to each other, sometimes very arbitrary and clearly self-serving or etc. In my opinion, success lies somewhere between those two extremes: People generally being able to talk to one another (and the architecture being designed where it's assumed that they're allowed to) even if someone else doesn't like it and wants to make rules against it, but still moderation set up for people who want it to the extent that they want it.

There's obviously still a need for someone to take responsibility for deleting spam, harassment, or abusive content, and there's going to be a grey area. I feel like, generally, you can let people control their own feeds and moderation that applies to them, and they will probably decide to configure it in a way where the anti-spam protection is applied to their feed and their weird additional arbitrary rules are not. That's what I was saying.

The creator doesn’t curate it beyond curating what communities are visible in it.

Yes, I'm aware. I was proposing a new way in which it could work, I know that currently it doesn't work that way. I don't even know that the thing I spitballed is the way to do it, just someone asked how it could work, so I spitballed one possible way.