The former, at least on Microsoft ones as Sony as rather a strict policy regarding mods.
If you take for instance Skyrim which is a highly moddable game, you can pretty much do whatever you want on Xbox One nearly equaling your experience on PC, minus maybe the graphical mods because of the hardware, on Playstation though the experience is rather harsh.
Then again the newer consoles are basically a small 2020-2021 PC, and Microsoft wants to provide the same experience on Xbox than on Windows ecosystem, so it's about time to see the boundaries dropping for good between Xbox and PC.
I don't care about Sony though, but MS is rather open-minded about that, it's good for console players honestly, given the devs can provide a good moddability experience to begin with.