I respectfully disagree. On our LW Android comm, the discussion quality is generally pretty good, except when a post get on the front page, then the quality just drops like a rock.
Smaller (but not too small) crowd usually lead to higher quality discussions, that's true on reddit(default subreddits are pretty much all terrible) , and that's true here as well. (the turning point for quality decline reddit is at about 20K subscribers). So, I don't think the "instance protectionism lead to lower discussion quality is true at all.)
Also, I think the mod tools here is basic but perfectly adequate. You can check our community's mod log to see how much post removal/bans we actually had to do, and it's not a lot. Also not to brag, but I think our weekly discussions are some of the best threads on Lemmy right now.
It's not hard, I just tell our comm's users that I expect them to act like adults, and most of them act like adults, and we just remove the post of the few who refuses to do so (they are like in the single digits over the last months) and our admins usually handle the trolls that requires site wide bans in literal minutes here.
I don't use bots to mod and still do not see the need for it, because it turns out that if you cultivate a good culture in your community, moderation is pretty easy. That's just my experience here though.