The reason they can't show ads is actually pretty simple: if I'm going to have ads in my feed, I'm just going to go back to Reddit for the same experience. Plus, when you consider dbzer0 et al, you're going to come to the conclusion that ads will either be a waste because everyone is using a strong adblock on Firefox or a browser that doesn't care about Google manifest standards, or the people who see them will be incredibly pissed, leave the instance, and either return to Reddit (or an alternative) or move instances and make a lot of noise toward defed'ing from the ad-ridden instance.

For me, I would rather just run an adblock and an anti-adblock-blocker on a different service than go through the frustration of ads on a non-corp platform.