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To expand the conversation; NOTE: I am NOT a Lawyer
People hosting a federated instance in Australia would likely be classed as a Social Media service and be bound by the relevant safety code on the eSafety commissioners site here: https://www.esafety.gov.au/industry/codes/register-online-industry-codes-standards. This is planned to take effect in December 2023 but serves as a guide.
First perform an assessment on your risk factor to determine a Tier (1,2,3) which dictates your required actions. Services that assess between tiers should assume higher risk, which means, potentially, you may be classed higher risk due to the general nature of the content (its not a club so conversation is around a specific topic).
Minimum compliance (assuming you are classed as a Tier 3 Social Media Service)
Section 7, Objective 1, Outcome 1.1 and Outcome 1.5:
Should you be determined to be Tier 2 or 1, there are a whole raft of additional actions including ensuring you are staffed to oversee the safety (1.4), and child account protections (1.7) (preventing unwanted contact), and active detection of CSAM material (1.8)
You may be looking for ‘Free Media. Heck Yeah’.