I don't know what there is to discuss. They're TOS, not to be taken totally literally. They're there for, as Game Theory said, when things get out of hand.
Honestly, if this forum starts moderating 420 clacks, innuendos and pictures with profanity then the site will be become pretty awful and I'll probably stop coming here.
Pretty much this. ^^
Perfectly articulating a set of guidelines that even a small group can all agree on is really hard. I suspect the illegal drug portions of the current TOS were written in response to Dangwang's old user forum, which, for the newbies, I'll just describe as enthusiastically pro-marijuana.
Two key points:
1. Moderation is subjective and requires making judgments that others will legitimately disagree with. There's no way around it. The TOS are stricter than the actual moderation that is implemented in order to make sure we can do what we feel is appropriate. It's possible that the delta between implementation and TOS is so great that the TOS should be changed to reflect reality a little better.
2. We haven't had moderation at all for very long, and there has been a lot of moderator churn. When I joined the forum two years ago it was a modless free-for-all. The forum and its culture have changed a lot since that time, and continues to change. So everything is still loose and subject to change. There's no well-established mod rule set or culture yet (like there is on, say, TL.net). We're still figuring things out.