I think having the right set of rules for the site's discussion (maintaining of which is a moderator job) and having a generally "good" population as an initial condition were the keys to setting the mods up for success. The mods' job then becomes to maintain the community's high level of discourse.
I see a lot of comments which violate the site guidelines in a fairly minor way. To me, strict moderation would involve curtailing those (to the site's detriment in general, a la Reddit, Wikipedia, or stackoverflow). Instead, I think we have strict guidelines and fairly tolerant moderation thereof. (I also find it interesting and telling that I felt normal to say "we have" in the previous sentence, rather than "news.yc has".)
PS: This is not meant to take anything away from what the mods do. It's critically important and they do a good job from my viewpoint. I think I got my hand slapped once in a decade (and I don't even now recall what it was, but I do recall that I agreed that I deserved it and it was handled reasonably).