Users can create their own communities called subreddits. If they do, they are the first and only moderator of that sub. A sub can be about anything, and if other users enjoy that type of content they can subscribe.
Ultimately mods can remove or approve any post they desire. Some mods are hands-off, and others curate content. It depends on their goals for the subreddit. If users are not happy with the content of the sub or the moderation style, they can subscribe to a competitor subreddit or start their own. It's very much an open system.
the "reddit drama" always makes me curious but I don't really know the rules very well.