This is almost certainly true. But what I can't figure out is that Reddit needs Mods for the subs. And surely mods, and potential mods, are more engaged and informed.

There's always been this implicit understanding that Reddit gets free moderation across the whole site, something other SM sites spend millions if not billions on each year, in exchange for those mods having autonomy, control, and a sense of ownership of the subs they mod. That social contract has completely broken down.

I'd guess mods get into modding for one of two reasons. One is power/influence, which is now seriously diminished, and the other is because they care about the community, and they must now be wondering whether Reddit Inc is the best place to host such a community when it appears to be so hostile to users.