I thought the same thing when Voat started as a mirror to Reddit. It was similar for a while but every time a troll or Nazi was ejected from Reddit they migrated to Voat. Eventually I was one of the last liberals there. Is there anyone maintaining order here or will it be the wild west ?

I think the lemmy structure really annoys trolls and right-wingers. They could register on a server, but they would have to play by the rules (be nice, don't be a nazi etc), which they really don't want. So they want their own server, but quickly realize that they'll be alone there with their miserable peers, which they also don't like.

I'm new to this federated thing, what prevents the nazi from hosting his own Lemmy instance where being a nazi is ok, and the content from the nazi instance showing up in "all"?

Nothing. This server existed, it was called wolfballs.com. lemmy.ml, beehaw.org, feddit.de and many others had this server blocked. So nothing was showing up from them.