Every Nostr client can basically decide how to implement the reporting system. NIP-56 describes how to construct report events but it's up to each client how to filter out content based on the reports. Some clients have implemented the functionality for reporting nudity, impersonation, spam, and "illegal activity in some jurisdiction". In practise when some number of your contacts have reported a note it usually gets hidden from your feed and there's a button for viewing it anyway. In general the ability to curate your following feed is enough to filter content you want to see and immoral or offensive content is not a real concern for the average Nostr user.