'Intentionally splinter' is a likely and interesting answer. Mastodon.social (the main site, with about 40K users) has now actually closed for registrations, so users are going to Mastodon.xyz, Mastodon.club, or one of the many other instances:
https://github.com/tootsuite/mastodon/blob/master/docs/Using.... Users on all of these can still communicate between one another freely though. Users can join any one they like and keep talking to all the others, or start their own, and can import and export their data to move between them fairly easily too (although you can't forcibly redirect the people who were originally following you).
Each of those instances are (potentially) run by different people, who can each have their own rules and limit entrance however they like, to ensure they can maintain their own rules. If an instance wants to allow nazis, or doesn't want to enforce any rules at all, then fine, but most others will block them. The nazis can have their own little corner of the internet, but nobody else will talk to them.
In practice, if Mastodon reached hundreds of millions of users, I'd expect that to be spread over a great many instances, run by many independent groups which makes the enforcement problem _mostly_ simpler. It's not perfect, but it's an interesting approach.