Dreamwidth contains lots of spammy blogs.
I wouldn't be surprised if Facebook just blocks an entire domain when abuse report incidents hits some threshold.
I'm not saying it's ideal, but I understand how it got this. DW should be on: https://publicsuffix.org/
And maybe FB moderation should consider the public suffix list.
Another solution is to moderate content on your domain. Or require users have separate domains.
If only there were some universally supported distributed cached database of domain properties.
One can argue that governments should have the right to censorship when its a matter of urgency or emergency or national security (though this is debatable), does the same power lie with Facebook (or any other platform) to exercise a censorship on its users? It goes back to the big debate whether they are accountable for what gets shared on their platform.
Dreamwidth has no such potential pitfalls as a whole platform.
This is a weird question. Of course a private business can choose what content they want on their platform. ESPN, for instance, censors tech news. If an ESPN journalist put together a story about Facebook blocking Dreamwidth, they'd censor it.
Having said that, I know there are some on HN that react emotionally anytime someone engages in "censorship". Oh well. No company is obligated to post content just because someone else wants them to.
The only point of Facebook's censorship is to control what the willing can see.
The same reason any other forum or platform moderates their content and usually removes sexual content, you want the default experience to be good for the average user on the site.