The PDS, in many ways, fulfills a simple role: it hosts your account and gives you the ability to log in, it holds the signing keys for your data, and it keeps your data online and highly available. Unlike a Mastodon instance, it does not need to function as a full-fledged social media service. We wanted to make atproto data hosting—like web hosting—into a fairly simple commoditized service. The PDS’s role has been limited in scope to achieve this goal. By limiting the scope, the role of a PDS in maintaining an open and fluid data network has become all the more powerful.

https://docs.bsky.app/blog/self-host-federation

And:

In the Bluesky app, we hardcode our in-house moderation to provide a strong foundation that upholds our community guidelines. We will continue to uphold our existing policies in the Bluesky app, even as this new architecture is made available. With the introduction of labelers, users will be able to subscribe to additional moderation services on top of the existing foundation of our in-house moderation.

https://docs.bsky.app/blog/blueskys-moderation-architecture

You'll see a lot more on their site. But the point is, this is more about a "distributed infrastructure" than federated control. So much still has to go through their central servers. Hosting your own server has little benefits. Moderation is still very centralized, even after their planned features for moderation.

[–] xnx@slrpnk.net 3 points 7 months ago

what downsides does the PDS part have? seems like its a good thing?

Their moderation is only hardcoded in their app. You can stack other moderators on top of theirs or use a third party app to not get any of their moderation. That doesn't seem bad especially for now to prevent spam etc from ruining the experience for users and to prevent people disabling all moderation and making a mess on their servers.