People were angry because they felt Reddit had betrayed their whole 'free speech' philosophy. Reddit's a place where people can make a community about anything, as long as it's legal. So, when their legal subreddit about hating fat people got banned, they cried out about censorship, hypocrisy, and lies.

From my understanding, the admins' justification as to why they banned /r/fatpeoplehate was that its users were actively harassing other subreddits and communities - and they were banning behavior, not ideas or free speech. Some people didn't accept that, and still believed it was straight censorship. Others believed that banning an entire subreddit for the actions of a few users was wrong. It just keeps going from there.

Ultimately, Reddit can do whatever they want, including bending their own rules and philosophies - but they'll anger the community doing so, understandably. Many were okay with the whole deal because /r/fatpeoplehate is widely considered to be a cesspool. But a lot of people weren't okay with it, regardless of their opinion on the specific subreddits involved.