Nazis are basically never banned from any lemmy instances, except our, for being nazis. I rarily even see nazi shit banned despite reporting it every time, and if they are banned, it's usually for tone policing reason.
Absolutely! The joke is that "freeze peach" sounds kind of like "free speech," so it's become a meme to mock the (usually far right) people who claim that freedom of speech should be upheld at all costs, including human decency, and that things like racism, sexism, LGBTQ+ phobia, hell even full-on Nazi propaganda should be unrestricted on the internet.
You heard it here folks: Nazis make really bad fruit water! Seriously they threw a whole peach in, that's not going to do anything. You need to cut up or ideally crush the fruit so the juice goes in the water smh.