You can host through Microsoft, using a service called Minecraft Realms, but the license agreement also entitles you to host your own server using whatever infrastructure you like, with certain restrictions on content and monetization (most notably, you aren't supposed to include things like gambling and lootboxes using real-world money or MTX currency that can be purchased with real money).

I'm all for piracy, but hosting your own Minecraft server isn't even piracy, it's explicitly allowed!

They do.

However there are a large number of servers that utilize plugins to strip out Microsoft's invasive chat monitoring where you can get banned from all online play for saying no no words, regardless of the rules of the actual server you're on. There's more nuance to it than that, but there are a lot of ways the Microsoft chat reporting system is being abused right now. There was even an exploit recently that allowed people to send fake chat message data back to Microsoft to get arbitrary users banned for things they never said. So Microsoft says "we're doing this thing to address concerns about online content and predators" and major servers go "Microsoft you're just making things worse".

Additionally, there are "offline servers" that use mods to patch out all communication with Microsoft/Mojang/Minecraft systems, and various other pieces of code that attempt to enforce only paid players joining a server, ultimately allowing people to connect without having actually purchased the game.

While this politician is full of shit, I can understand the fervor. Especially if they have a Minecraft playing kid.

To give an example of the state of some of the most popular servers, there is one heavily customized server that allows for effectively any client-side mods to be run on it. It has one of the largest developed maps of any server ever, and effectively allows hacking. There are entire sub-sub-sub communities making mods just for this server to help streamers hide details of how the block textures are randomly rotated that could give away base locations. It's absurd.

Anyway, someone recently did a massive coding project figuring out how they could back up the whole map as a regular user. They also did some data analytics on the map. One of the data points was amount of "5x5 obsidian pinwheels", better known as swastikas.

Sure, it's edgy internet assholes, but it's definitely an image issue that Microsoft would love to have useful idiots like this guy paper over.