imo nothing wrong with a platform deciding what content it wants to host.

But there’s also nothing wrong with allowing this type of content. Who wants to help me build an uncensored game distribution platform? We could call it Steamy.

Yes, but it's not the platform really making the decision in this case. It's their payment processor

The mistake is thinking about payment processors as a "platform". They're not. They're critical infrastructure operating in an environment with low competition, and them denying service — beyond what is illegal within a certain jurisdiction — is more a kin to your electricity company denying service because they don't like that you use their electricity to power a device to watch porn. I think everyone would agree that to be crazy.

Incest rape simulators, zoophilia, lolicon?

I think this stuff has no place on 'normal' store fronts like Steam and Itch. It should be on an 18+ only store front at the very least.