Well, that's accurate and indeed a major problem.

Subreddit moderators, like unfortunately usually moderators everywhere, can act arbitrarily and there is no way for users to remove or punish moderators.

So this means that /r/$FOO is not actually a subreddit about $FOO, moderated so that exactly any non-spam discussion about $FOO is allowed, but rather a dictatorship ran by whoever happened to grab the name first.

So for instance if a company creates a subreddit about their product before it's announced (which they are guaranteed to succeed at) or perhaps buys or acquires it afterwards, they are allowed to censor it arbitrarily to remove negative opinions or anything they don't like. Amateur moderators can instead moderate according to their personal agenda.

The advantage that something like Reddit can have other normal forums is the existence of an higher authority that users that are banned or censored can petition to to have them ban the moderator instead, and it was pretty absurd that there used to be no way to do that.