Often, prohibiting *all* sex-related materials -- "adult content" -- is a function of a user's contract with their web host, in which case it becomes a contract law issue. Since most, if not all, hosting companies are private with no public concerns (ie, they don't perform a public function), they are free to include such clauses in their user agreements and contracts although many don't -- business is about the bottom line, after all. Of course, there are many possible arguments that can be used in attempts to break these contracts down, but that gets fairly detailed... Free speech concerns can and do defend those who choose to allow adult content on their servers, to an extent -- child pornography and extremely graphic/violent porn can usually be banned under laws "for the public good" or for 'moral' reasons (and if somebody would want to overturn those laws, that's what the polls and the legislatures are for).
The issue of jurisdiction also comes into play because of the nature of the internet. Does the state/country where the server is physically located have jurisdiction to create and enforce laws pertaining to content hosted on those servers? States/countries that the data travels to or eventually ends up in? How about the state/country where the business/person is incorporated/located -- as opposed to, say, an offshore server? None of these questions have been completely answered because of the lack of very concrete international law, especially related to intellectual property and computer data.
Also keep in mind that not all "sex related materials" are classified as "pornography" as there are many sex education/advice sites that are considered completely legitimate because of what they cover and how they do so.
Hope this helps a bit,
~Ladi
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