Sorry for the late reply, this one snuck past me.

How do flags/downvotes punish anyone?

"Punish" in this context can be thought of as "disincentive" for the sake of semantics. When spammers and plagiarists are flagged, it's used as a way to enforce a common standard. However, "opinion flagging" or otherwise downvoting because the author shared the wrong idea/perspective is a highly divisive approach that will fragment this community indefinitely.

How does a flag change what is or isn't allowed? Flagging is not censorship.

All one needs to do is look at youtube to see users flocking in droves due to demonetization, and that's despite google's dominance of the market. Steemit doesn't have that luxury, and demonetizing users by micromanaging the opinions allowed on the platform will exponentially diminish returns in growth and retention.