Moderation (the intent and success) varies to such a huge extent that it's practically silly to talk about moderation on Mastodon unless you mean moderation on a specific mastodon server (like mastodon.social). But moderation (the process) is intense and servers are usually community run on the change found in a spare couch (i.e. they're volunteers).
I think they do quite well considering the disparate resource levels, but some servers are effectively unmoderated while others are very comfortable; plenty are racist or other types of bigot friendly, but the infrastructure for server-level blocks is ad-hoc. Yet it still seems to work better than you'd guess.
Decentralization means whomever runs the server could be great, could just not be good at running a server, could be a religious fundamentalist, a literal cop, a literal communist, a literal nazi, etc etc. And all have different ideas of what needs moderating. There is no mechanism to enforce that "fediverse wide" other than ad-hoc efforts on top of the system.