If a server does something awful like encouraging spam or allowing abuse or whatever, admins of other servers can block it, which is also known as “defederation”. The worse a server behaves, the more servers will block it. The very worst-behaved servers will find themselves almost completely isolated from the rest of the network, because so many other servers have blocked it.
A real world example: in 2019 a notorious far right community attempted to join the Fediverse, but so many other servers pre-emptively blocked them that the group gave up and abandoned its plans to federate. There was even one third party app which rickrolled anyone who attempted to use it to log onto the far right server.
This is also why it’s important that no server gets so huge that others are scared of blocking it. If that happens, it becomes much more difficult for others to rein in the huge server if it does something bad.