At a certain point, all of these Social Media Entities are reflections & outgrowths of the personality of an individual, or at most a small group, with other people coming in & participating because they see something they like. When you reduce the size of the Entity to the individual, their actions are, I suppose, by definition, democratic, but that's just a kind of limiting case, & I'm not convinced it means anything.
I agree; the original post is based on a false equivalence between the instance owner and the users. The admin has full rights to conduct their instance however they want (this right, however, is diluted if they accept and receive donations). The federation allows for every individual to have their own instance, and so has the capability to contain a "democracy". It is just irony that the people chose not to exercise that freedom.
"I appreciate SDF but it's a general-purpose server and the name doesn't make it obvious that it's about art." - Eugen Rochko