Even if the servers were located in another country, as site owner that lives in the U.S. I am still liable for content that I allow on the site and could potentially be held accountable. Be it child smut, allowing illegal downloads, or some whackadoodle posting death threats. When something here on the site gets reported to authorities, I'll get fun phonecalls from police/investigators. And yes, that HAS happened before. These rules aren't just protecting members, they also protect me. 8D
In any case Jorick pretty much nailed everything on the dot about the Hows and Whys!
As a WRITER I want the freedom to write anything I want to write and tell any kind of story I want. Even if that includes morally objectionable, shocking, traumatic content. Stories are not always rainbow kittens, sometimes they have fucked up shit in them, especially for horror/thriller/crime stories. Iwaku does not believe in censorship of content. We want you to have as much freedom that we can give you!
That is why our rule for characters in sex scenes goes as low as 13, even though it's super gross. D: 13 begins the teen years and teenagers realistically start getting involved in sex.
I would honestly have ZERO limits at all, if I didn't have to worry about legal issues that could pop up because of the people that are cybering more than they are roleplaying. Unfortunately, it can be really different to tell the difference between people genuinely trying to tell a story using sex as the focus VS the people who are just getting off on it for cybering reasons. It'd be impossible to moderate properly.