Still happens, you're just not allowed to talk about it. /r/bannedforbeingjewish (which collated this) is banned,[1] but to give an example, /r/interestingasfuck (13 million subscribers) bans users that are members of /r/Israel.[2]
Reddit was a trash heap then, and it's gotten exponentially worse since. Why anyone go there voluntarily is beyond me. It contains nothing of value.
There is no way for the mod/bot to know this rather. It is clearly spelt out in the terms.
“You have been banned for participating in a bad-faith subreddit (specifically Israel) which brigades other subreddits and spreads propaganda/disinformation/racism/sexism.”
Personally I don’t use Reddit that much, so I can speak to if this statement is true or not, the mods however do think it is.
Also as you’ve outlined, plenty of the misinformation is targeted at Israeli citizens themselves and banning those people from the opportunity to engage outside of their bubble makes no logical or moral sense