The instance is the property of its owner, and owners have the right to control their own property as they see fit. Many Mastodon clients allow users to manage multiple accounts, which can be on different instances with different server rules.

Edit: Additionally, a user can block content from any other user or instance, and also filter content by keywords or phrases. https://docs.joinmastodon.org/user/moderating/

Then what's the point of using Mastodon over other social networks?

Centralized social networks only have one instance that is controlled by a single company. Mastodon can be self-hosted by anyone, and any instance can interact with any other instance by default. Any Mastodon user can pick an instance with server rules that suit their preferences, while centralized social network users must abide by the rules of the only available instance.

Mastodon servers and clients are free and open source, and also ad-free. Most Mastodon instances allow you to sign up without providing any personal information other than an email.