> HackerNews doesn't allow racism [...]
HN is the equivalent of a single sub-reddit. Readers see the titles of all submissions that make it to the top pages or to the RSS feed they are using. They also see the user name that submitted the story, and the site it is from.
This necessitates restrictions on content, because nearly everyone has some kind of content they do not want to read to the point that they will choose not to visit sites where they cannot avoid it. Without restrictions, it would be too much effort to pick out the things you are interested in from among the things that you find extremely distasteful or offensive that it just would not be worth the effort for most people.
Reddit has sub-reddits. As long as an offensive sub-reddit is not made a default sub-reddit, and you do not subscribe to it, and you aren't subscribed to sub-reddits (or external sources) that discuss whether or not Reddit should allow offensive sub-reddits, you will rarely or never see that offensive sub-reddit.
For example, I had no idea that /r/coontown existed until it was mentioned several times here on HN.
Reddit would be best off in the long run, I think, if they set the line at legality under the laws applicable in whatever state they are incorporated, along with a no doxing and no FPH-like material, combined with a logical split of Reddit into two sets of sub-reddits: Prime Time Reddit (PTR) and Uncensored Reddit (UR).
The two would share accounts, but only PTR shows up on your front page, and there would be a link to take you to a UR front page (or maybe an option to show UR top content after PTR content on a unified front page, with a separator between the two sections).
Both would require (1) legality, and (2) no doxing and FPH-like behavior. PTR would in addition require that sub-reddits (including their topic, their acceptable submissions, and their comments) be things that would be acceptable if they were part of a US nationwide prime time television show.
Advertisers would be able to specify whether their ads just go to PTR, just to UR, or both, and maybe there should also be separate Reddit Gold systems on the two.