The text of every post is stored, along with up votes and down votes and other metadata. However, photos and videos are not actually stored in the blockchain.

Once in the blockchain, it can't be removed or censored. So, what's a government to do? They can't require the impossible. Best they could do would be to order Steemit not to display certain data found in the blockchain, but they couldn't require it to be deleted and they couldn't censor it.

I assume that if Steemit gets a DCMA notice they can and would stop displaying the offending data on their website, but it would still be on the blockchain, and I'm sure there will eventually be "dark" versions of Steemit, or dark blockchain browsers/explorers, that will make available an uncensored view of the blockchain for those who really want to see it.