Minecraft does not ban users for profanity. The list of ban offenses is currently:
Hate speech, sexual content and soliciting improper contact, real life threats, exposing the personal information of others, posting links to malicious software, impersonating staff, cheating/exploits (this includes anything that would negatively affect another person’s gameplay experience), general commercial spamming
Profanity is considered the responsibility of specific server moderators since it's a low-level offense that's virtually impossible to police in a game like Minecraft. They're trying to avoid the notoriety recently obtained by Roblox for being a place for adults to exploit children.
That's obviously not what's happening here though. I have plenty of adult friends who go on public and private servers and actively trash talk during games and have never been banned. And none of their friends have been banned. A small group of 10 year-old children aren't having a coordinated attack of hundreds to thousands of reports against them repeatedly over many months.
Not to mention tacking on the requirement that instead of a bunch of 10 year-old children being - as they tend to be - offensive/testing limits when adults aren't looking, Microsoft is publicly lying to their customers (creating liability) and implementing an automated system so poor it doesn't so much as check if the reported user even uses chat.
EDIT: To further substantiate what I'm saying, I just checked and you cannot submit a report without selecting the specific messages that relate to it. The UX requires that the individual messages are selected and cannot be submitted empty. The parent is at least being misled in thinking their child or their friends don't use the chat feature.
Honestly, starting a new block engine from scratch with the lessons learned from Minetest and Minecraft would be a better idea. Minetest is just too far behind to catch up, on a dilapidated tech stack with a far worse modding layer than Minecraft.
Why the assumption that they care only about liability? Minecraft is now a multi-decade game and they want to keep it as the #1 king of it's domain to sell copies for many more decades.
That will be hard if parents see headlines about "Minecraft" (no, the specific server host won't matter) being used to exploit or otherwise prey upon children and stop buying it.
Because Microsoft sees what's happening to Roblox and what has happened to countless children-oriented online game platforms and wants to make absolutely certain they don't have headlines about adults abusing children, exploiting children, taking children off-site, or so on from "Minecraft". Because you can be damn sure the parents won't read the nuances of what server it was.
And yet far less naive than believing a group of 10 year-olds are being repeatedly banned for no reason with their chat off, instead of the obvious that when parents aren't looking they're being abusive to others in chat.
Reminds me of the classic:
> No, I wasn't looking at dirty websites, it was a virus!
As someone who used to be a part of the Minetest scene, it's not even remotely close. While it's low-end requirements are better, it runs remarkably poorly for what it is. It's (default subgame is) a decade behind Minecraft in terms of usability/features. It's barely maintained, especially after one of the big modders and graphics developers died to a heart disease.
And with the mods, it's only "easier" at the very surface level. Unlike the Java-edition of Minecraft, where anything can be changed, you are limited to their modding API in Minetest. And this API is thin.
No dynamic skyboxes, no full entity rotation, no way to handle subgrids. Entities have huge pop in/out issues and forget about anything crazy like having animal heads rotate to face you. No custom keybindings, no overriding mouse controls. Forms have terribly poor ergonomics and it's taken a few years now to have elements displaying at the correct coordinates (for a while, different elements had slightly different interpretations of the grid). Tons of stuff is hard-coded, like how tools work, damage calculations, HUD. And none of this can be added or changed without a fork of the underlying C++ engine codebase.
For the longest time they had no client-side modding and when they added it, they ended up barely having anything in it. So if you want a mod with some kind of vehicle, it is a complete hitchy mess since the client-side's would interpolate wrong and need to be forcefully corrected by the server dozens to hundreds of milliseconds later.
I spent a lot of time making mods for the couple folk I played with. I eventually quit because it was so frustrating trying to work with that engine and constantly jury rig and compromise solutions. Went back to Minecraft for those times I want to play a block game.
I know I'm being a bit brutal, but Minetest doesn't stand a chance when the expectation is set that it is/will be in the same ball park as Minecraft's level of quality or moddability.