> It's compensation for damage done.
But you're still being held liable for that damage, despite the fact that you did not cause any physical damage. It was just words, and yet their effect is considered damaging.
That's aside from the fact that there's also a thing called "punitive damages", so that still is quite explicitly punishment. So these are words that do damage, and they're punished for.
> if a threat is a threat to do something illegal, how can a threat to do something completely legal be a threat?
I guess I should explain the terms I use a bit better. You're right that words can mean different things, and I'm talking about the legal concepts of threat and blackmail, but in my too-brief explanation of blackmail, I use the word "threat" in one of its other meanings.
So here's what I mean by threat and blackmail:
Threat: expressing an intend to hurt someone. Here, hurting someone is illegal, but expressing the intention to do so is illegal as well.
Blackmail: expressing an intend to reveal embarrassing information about someone unless they do something, in order to coerce them to do that thing against their will. Here, revealing the embarrassing information might be totally legal. In fact, if the information is about a crime the target committed, revealing it might even be the right thing to do. And yet saying you're going to reveal it unless they do a particular thing, is illegal.
In any case, I think we have established that there are forms of speech that are illegal, are considered damaging, and/or are sufficiently harmful or damaging to warrant compensation or punishment.
So to get back to the original topic: is hate speech damaging? And is it sufficiently damaging to warrant compensation or punishment? And if we were to conclude that they are, legislating that is not necessarily a more significant infringement on the freedom of speech than the existing laws against libel, blackmail and threats are.