I doubt this instance is being used by enough people to get trolls using it. It's just because of the registration policy, which is open as opposed to the rest of the instances.

They just are too lazy to moderate it. Nothing to do with actual illegal content or imaginary trolls.

Readme on the repo says it's just scrobbling and fetching metadata. But afaik you can make instant mixes based on this data.

Here's some tool to sync last.fm playlists to jellyfin: https://soundiiz.com/tutorial/sync-lastfm-with-jellyfin

I don't think there is any self-hosted server that has a good playlist generation and is fully local, because it would need someone to classify the music in order to work. You can try to connect it to last.fm. I think Jellyfin has the addon for it.