This is exactly why I won’t use Nostr. What you’re describing here isn’t ideal for many folk that are part of marginalised groups. When each individual has to individually block every bigot only after being exposed to their bigotry, then the vulnerable folk don’t hang around. This is doubly the case when there is nothing stopping the bigots from just creating another account after burning their first one.
In Nostr, each relay can set its own policies. Relays can and do establish policies for acceptable behaviours. If you want a strict content policy, connect to relays with strict policies. You won't have to individually block any users or relays/instances. This is essentially the same as mastodon. The difference with nostr is that you normally connect to multiple relays, so a single relay, where your identity is tied to, cannot block you from following who you want and seeing whatever content you choose. Let's say Relay A blocks a user you want to follow. No problem, you are connected to relay B and C that don't. And, of course, if for some reason you only want to connect to a single relay, you can.
This is also something that activitypub communities do better, because they are communities not relays.
"Hope our commmunity of users donate" didn't work out well for the previous iteration of P2P discussion spaces: forums. The fact is, hosting online discussion forums gets costly quickly, especially if you want them to be reliable. Hell, even IRC servers which serve only text can get expensive to host. I'm not saying there's no way to convince users to donate to valuable instances, just saying that as a general strategy for FOSS it hasn't worked particularly well.