What’s wrong with having a mod that removes the skin color selector? I get people care about race and stuff, but is it really necessary to force everyone to have a skin colour selection option if they don’t want a skin colour selection option? You’re not going to make a racist see clearer by forcing them to do something that only affects them.
You have it in your own question. It is hateful. It was made by the hateful for the hateful to perpetuate a hateful idea. You might even call it a kind of hate speech, which probably means it violate Nexus’s terms. Even if it doesn’t, it’s icky af. And Nexus is entirely in their right to refuse hosting it. The nod creator is still free to use their own mod and share it in other ways, but Nexus should not be forced to host it.
Imagine there was a group of people in your school, in your workplace, in your city who for some reason feel that Kazakhspy should not exist. They’re not allowed to kill you, that’s against the law, but they would if they could. Instead, they say fuck Kazakhspy, go kill yourself Kazakhspy, I can’t stand you Kazakhspy. Hearing that kind of thing on a regular basis might be a little hurtful. Now imagine some game studio heard about this and thought hey, let’s include Kazakhspy in our game. And then that group in your community was like “what the fuck is this! I hate Kazakhspy and now they’re shoving Kazakhspy down my throat in a videogame? I will not stand for this.” And goes through the effort of making a mod to remove you from the game and puts it on the website. You hear about this and see that it’s up there with a few downloads. You might be a little hurt to know some people hate you so much they’ll mod a game to spite you just because they don’t like your existence. Then the website owner is like, “Wow, this is weirdly hateful and doesn’t belong on my website. Let’s not perpetuate hate against Kazakhspy.”
That’s why. In context it’s hurtful to people because the intention of creating it was to hurt people through hate.