That's an acceptable cost for not having to submit to anyone's whims about allowed content
Only 100 users and anything goes --- yes, I can see how that might be acceptable. I can also see how most people might have little to no interest in participating.
The small community can make its own rules. I’ve seen Mastodon instances with both stricter and less strict rules than Twitter. And it’s fine because people can just spin up a new instance if they don’t like it.