This isn't a "security vs usability" trade-off as the author implies. This has nothing to do with security at all. /etc/hosts See, HN didn't complain. Does this mean I have hacked into the site? No, Substack (or Cloudflare, wherever the problem is) is run by people who have no idea how text input works.
This particular rule is obviously off. I suspect it wasn't intended to apply to the POST payload of user content. Perhaps just URL parameters.
On a big enough website, users are doing weird stuff all the time and it can be tricky to write rules that stop the traffic you don't want while allowing every oddball legitimate request.