Hmm no, I imagine they would stay on an instance (similar to the Usenet provider) and join groups or whatever they're called on mastodon, similar to the Usenet

Hmm no, I imagine they would stay on an instance (similar to the Usenet provider) and join groups or whatever they're called on mastodon, similar to the Usenet newsgroups. And then the moderators would come from the management of each group, independently from which instance they're on. There would be no central authentication necessary. Just some way for moderators to prove their ownership, perhaps some kind of public key. This way each group can do their own moderation. Of course some instances could decide not to carry some groups that go totally counter to them, but it should be a rare phenomenon. Similar to the old Usenet providers blocking binary groups (before that was the only thing Usenet was being used for anymore :) )