No, they literally identified a plausibly sensible policy flag, not some arbitrary action.
These flags are used in literally every system imaginable.
They they don't conform to some hard criteria, to your criteria, or to some working or ideological group's criteria is a bit besides the point.
Every system has these for good reason.
We have laws and regulations for all sorts of things to help people - including children and parents - in a complex society.
"The state has no business listening in on private citizen's communication."
The absolutely do, depending on circumstances. While Facebook is not a place for state monitoring, it's definitely in the public interest if they flag something that is 'very bad' by some reasonable criteria, so that the state can then act if necessary. They do so within the boundaries of the law subject to judicial oversight.
Facebook is a popular social network, a place that they want people to feel imminently safe. It's a Starbucks lounge without coffee - not a 'personal hyper protected zone'.
Other places, such as Signal, Telegram etc. can have different levels of privacy aka e2e given the different offering and expectations of privacy.
Facebook more or less wants to offer a relatively safe place where the kids can hang out, where they know crazy people are not going to attack their kinds. It's a community centre not a hacker zone.
If we can get past that, then we can move onto basic issues of privacy, advertising etc. which are damaging to everyone, especially young people, for which Facebook has perverse incentives.