It can be done either way. Client side or relay.

Both relays and clients can censor. Any relay that restricts who can post to it or what type of events it will accept is in some sense censoring. Clients can also censor in various ways, maybe through default muted words, or a default list of npubs that are labeled as spammers, or by only showing posts from users that meet a certain WoT threshold, among a number of other ways that a client could hide posts from users.

I see.