Dear Author has a good summary of this
here
It seems that a big part of this is not so much actual illegal content (there may have been some I don't know) but adult content showing up inappropriately in other searches, especially searches children may make. And this is partly the retailers search engines but it appears it's also partly because organisations like Direct2Digital are not vetting authors' use of blurbs, covers and tags. So some unscrupulous erotica authors are trying to get their book more widely seen by putting tags that cause it to show up in general searches. I bet this is due to an almost entirely automated system somewhere in the process. From the link above:
Quote:
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What is clear is that Direct 2 Digital uses no filters unlike Smashwords. None of the Smashwords titles were taken down but the ones from D2D were, likely because D2D had no way of filtering out the questionable content.
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So in some ways I can't blame Kobo for temporarily switching off the D2D feed until they have some confidence this kind of gaming of the tags system has been resolved. Kinda sucks if you're an author of a non-erotica title that goes through them though. Or even an erotica author who plays by the rules (which I'm sure is most).