This was more than a decade ago. Someone from HR mistakenly emailed a spreadsheet of all employees’ salaries to a bunch of people who aren’t authorized to see it. As part of my job, my team was tasked to track down all traces of the file on email and company workstations and remove it. Naturally I was able to see the file because of my task. I saw how low my pay was compared to my colleagues and how absurd it jumps up in just a couple of levels in rank. I and a lot of employees quit shortly after.
I saw the drama unfold when I was browsing All. My 2 cents:
In terms of the content in question, the lemmynsfw admin was right. I believe the community they were talking about was c/adorableporn, which AFAIK is just naked women acting cute, not acting or implying they are underage. The blahaj admin seemed to have misunderstood the premise of the community.
On the other hand, the lemmynsfw admin didn't really explain it properly and some of the words they used didn't exactly help their justification. At one point the admin said they do not discriminate against a poster's gender, looks, age, etc. and used words akin to saying they do not discriminate against people who are "too young". Obviously that didn't come across well in the conversation with the blahaj admin. The community's rules also had some questionable wording ("child-like" is the term I believe they used), which the mods changed when it was pointed out. So all these things didn't really help their defense.
At the end of the day, it's the blahaj admin's lemmy instance, so they can do whatever they want and defederate if they wish. It's up to the users on the instance to decide if it was justifiable and if they are ok with losing access to the entire lemmynsfw instance because of a misunderstanding.
EDIT for transparency purposes: As someone mentioned in the replies, I missed the word "adult" in recalling the statement that mentioned "too young", so the admin did word it correctly. I stand corrected.