If section 230 only protected from undermoderating and not from overmoderating, then providers would be incentivized to keep every comment up, from scam links to hate speech, because they'd only get in trouble for removing comments and not for allowing them.
If HN: it isn't a public service that has to allow free speech. One of the reasons it has persisted and maintained a certain level of quality is because of it's community rules, and their enforcement.
Flag is for inappropriate content / behaviour.