The benefit would be the content. Imagine you post to a magazine with 300,000 users, with new posts every 5 minutes, and hundreds of comments per article; that kind of an experience would be more desirable than posting to a magazine with 500 people, with new posts every 12 hours, and maaaybe 10 comments on the more popular posts, wouldn't it?

The benefit of every server moderating everything that comes in would be that a post that isn't suitable for one instance could be perfectly fine for another. Imagine the topic of politics: for some people, discussing abortion might be too sensitive, but others might be totally fine with allowing it. We wouldn't want to stifle conversations about that subject, though, so maybe it gets through to the individual instances to handle it as they see fit. This way a user can continue interacting with a large community that's interested in politics, instead of fragmenting that community into half a dozen smaller communities; sure, some posts might be hidden by some instances, and those threads would be less active than thread about more agreeable subjects, but that's still a lot better than every thread being less active, isn't it?