Sure, they could make it so that users have to use a third party image host, but that doesn't necessarily solve the problem. Their instance would still be hosting links to that material. That might give some degree of protection to the owner, but it still gets a bit sketchy and instance owners just don't want to deal with it it seems.

I suspect we'll see new Lemmy instances pop up now with am the attention is getting, so it's only a matter of time before a NSFW friendly instance appears.