Steem is essentially decentralized but the applications running on top are mostly not. Therefore the application developers have every right to block and refuse to show specific content through their app. The blocks which contain the content may exist but since we have a variety of block explorers, how that content is presented exclusive from the blockchain.

In regards to rewards, those are Central to the blockchain and are subject to it's rule regardless of what someone's opinion is. One thing that should be noted is that both upvotes and flags affect the reward pool and it's something that all curators consider regardless of their personal belief.