Yes, any Element user can report abusive or offensive content to admin of the Matrix server they connect to, and admin can remove the content locally and/or block remote Matrix servers from which the content originates. At their discretion.

That's optional. User can turn it off.

But it's on by default, just like Reddit apps are required to have NSFW filters on by default.

I dunno if it's possible to do this kind of filter on Matrix.

That said, if they go with this argument, the precedent would have to apply to all other unfiltered, federated messaging clients, including those for IRC and email.