It does do a fair amount of filtering of submissions, and it's a long term archive (e.g. for the next 100+ years). I suspect both (but with the former dominating) are the issue.
Well, technically, it can also compile your tex file if you upload the tex file instead of the pdf directly, which helps a lot in standardizing the stylistic structure between preprints. Most other repositories are wild west and inconsistent. I really appreciate the similarity in style applied to most preprints there. Moreover, this means you can also download not just the pdf, but the source tex file to, which can be very useful.
The similarity in style comes from conference and journal templates, not from Arxiv. You can style your paper with latex in any style, Arxiv doesn't care. On Arxiv you mostly see preprints that people submit to conferences and journals and they enforce the style.