It's the same censorship-model as with mail servers: You can use a big shared hoster and the rules of that hosts country and their policies apply. You can run your own and you will have to deal with any local legal requirements and get to set (but also have to enforce) your own policies. In reality, (self-)censorship is the smallest of your problems, spam and abuse of your service is what you'll be mostly dealing with.

For a small instance with only a handful of friend and family accounts that effort (spam, abuse, legal stuff) will take less than 1h per month. On a large instance that can become a full persons job.

Source: I'm running my own fediverse instance since 2011 (using Friendica, predates Mastodon) - as well as my own mail server.