The observation is correct but the interpretation is mistaken.
Some of the community wants those submissions to be on the front page. But another segment of the community is flagging them. You're attributing one action to "the community" and an opposite action to "censorship", but I can assure you that both are coming from the community. The community is simply divided.
This tug of war between upvotes and flags is in large part how HN's front page gets constituted. It's typical for the most sensational stories to get heavily upvoted at first, enough to make the front page, but then to trigger an immune reaction from the rest of the community. Those who like the story will say that it is flagged "for no reason"; but large sectors of the community do not share their views, and from these others' point of view, it wasn't "for no reason" at all.
In the case of the recent Israel vs. Gaza stories, the mods mostly didn't intervene. To the extent that we did intervene, it was to override user flags on certain stories. That makes me think that your statement, "It's frankly eye opening how much censorship there is going on", is an overinterpretation.
Should we have intervened more or less? Unfortunately the answer to that question is isomorphic to your pre-existing position on the underlying issue.