A friendly mutual let me poke around in their account a bit, and I saw two types of moderation at the account level. One is account blocks, which seems straightforward, but given the differences in the underlying protocol, I don't think we should assume too much about how it works. The other is categorical content filtering, which relies on ML-enabled post flagging at the index server level, though I don't know if flagged posts are kept out by the algorithm or blocked at the host server.
In general, it looks to me like the protocol is designed to delegate most machine-level decisions about an account's timeline to the index server, so any time there's ambiguity there, I incline toward the interpretation that the host server is passively accepting the timeline served by the index server. So my guess would be that content filtering is handled by the algorithm and served to the host server that way, but that's just a guess.