Besides the filter not catching many of the naughty words, people tend to know which words they are and use alternate spelling or other ways to evade it. There are filter addons, but only so much you can do. I do wish that some innocent words like "cave" or "bite" were off the filter, but hey... there are other priorities.
And then there are cases where game censors its own content. For example,
this quest, where you are trying to find out certain aspects of gazelle population by analyzing certain aspects of their... ummm... digestive leftovers. Game filters that word.
Or a quest where you are attempting to assist human infiltration team checking on gnoll tribes, and you need some ways to fool the gnolls' sense of smell detecting human smell. Let's just say I hope that team has good access to showers. :p