It ignores all NSFW communities. I'm planning on adding a switch for that, but if you really want, you can change nsfwFilter property in local storage through devtools. all is for everything, none is for no NSFW and only is for only NSFW communities.
Sometimes it fails to follow a community. Maybe it's because community is not yet "synced" to the instance you logged in from. Don't know much about exact reason, because I'm new to lemmy from the tech side.
There is also a planned feature to exclude whole instances. Currently only possible with editing local storage.