I think I've finally figured it out based on what my sh.itjust.works account shows:
If you're on a censored instance, all words will be blocked no matter what
If you're on a non-censored instance looking at a comment from a censored instance, that comment will still show up as removed
If you're on a non-censored instance looking at a comment from a non-censored instance, the comment won't be censored
When I'm on my sh.itjust.works profile, the comment by @Lazerbeams2@ttrpg.network isn't censored, but mine still is. So, the censorship gets you both coming and going - no censored words can make it into a censored instance, and no censored words can make it out either.
Thanks for solving the mystery! I find it odd how an instance like lemmy.ml would randomly censor certain swears, but beehaw.org doesn't seem to? Maybe I'm misreading some people's comments in here.
I'm on lemmy.world and things don't seem to be censored on this instance either if anyone is curious. I can say "bitch" all I want.