Anti-cheat plugins can go a long way in detecting people cheating and banning them. Next to that, staff can look out for people cheating and get rid of the people who manage to get past the anti-cheat.
I don't see how allowing cheats on a server would work, it seems to me it would completely ruin the game for other players. You can of course decide to allow some mods that don't significantly impact gameplay and mostly serve a utility purpose.
