My diamond was removed something in the ballpark of an hour ago, as per my request from last week. Thanks for your understanding, everyone.
(1) I signed this letter. It has been signed by a very large number of moderators and ex-moderators
(2) David Fullerton, CTO of StackOverflow  has posted a considerably better apology that appears to recognize many of those points. Its an encouraging sign that there's an actual recognition of the issues and some preparedness to address them.
(3) I have also signed this letter; in particular I agree with each one of the three specific requests for action in it.
 (which I'll continue to think of and speak of as "StackExchange", since it better represents the network of sites I participate in)
I've been agonizing over this for quite a few days now. I hate to do it - and I certainly don't do it lightly - but I no longer see my position as a moderator as tenable.
A number of things in recent times have concerned me about StackExchange, but recent events have brought matters to a head.
Meanwhile, Stack Exchange Inc has gone to some trouble to make it hard for people to know what is actually going on, including changing the algorithm by which hot meta posts will appear on your page.
For example this meta post Firing mods and forced relicensing blew up, and you should have been notified about it in the "Hot Meta Posts" section of the sidebar but SE made sure that it and posts like it would not appear in the Hot Meta Posts notifications. I found it by pure accident. Nice.
If the StackExchange community is bothered by something, you no longer get to know that unless you're checking meta.SE carefully.
So what has happened? Skipping a lot of details (but you can find them; the above link has many further links in it, for starters, see later posts in meta and their answers and comments for further information, and check the posts in the various site metas, such Writing, for resigning mods across the network), here's a rough summary.
SE is going to introduce a new Code of Conduct which (among other things) is attempting to make the site more accepting of LGBTQI+ users.
A summary of this Code was posted to a private moderator-only chat room. This is not an unusual eventuality and open robust discussion of proposed changes is also not unusual, such things have been discussed with mods before and their views taken into consideration (usually leading to much better outcomes). One of the mods - one of the most respected mods on the entire SE network, and someone I have held a deep respect for since before StackOverflow was thought of - asked some questions about a particular aspect of this policy and how it would work in practice. This is all to be expected.
After a while this discussion went to email.
A Stack Exchange employee appears to have accused this moderator of bigotry. Stack Exchange have removed the moderator (Monica Cellio). This removal occurred hours before a major religious holiday for this moderator (and during which she would not be able to respond)
The official position is that she violated the current code of conduct. Monica's position is that she has not violated any part of the current code and has repeatedly asked for clarification about what it is that she supposedly did.
The moderator was not even told removal would happen. There was no warning. She thought she was participating in an amicable email conversation and only discovered her removal when she noticed she had gained badges moderators can't get.
She attempted to reach out to achieve some resolution. These have been ignored.
SE staff appear to have attempted to paint her in a bad light in the media at a time when it was clear she could not respond, while also telling the community here they couldn't talk about it.
The "apology" offered by Sara Chipps (overnight my time) was really not adequate. It does not reassure me. To me it does nothing to right the wrongs here and doesn't seem to really recognize that what was done was wrong or seeming to be actually correcting what was wrong about it. (I recommend reading comments under the top answer at that link.)
This is not quite the whole story, indeed we probably won't have it all since some parts of the story are not public; there's some only moderators can see and we'll probably never know the exact content of the email exchange. Don't trust my take on it though, go read for yourself (keeping in mind that we don't have all the information - but even a very generous take on it doesn't leave Stack Exchange looking good).
Explaining these points in some additional detail (as far as I am aware of them) and my views on them:
I support attempts to make the site more accepting of LGBTQI+ people. I support a policy of asking users to use other people's desired pronouns each time you use a pronoun to refer to them. Apparently, so does Monica "I would never knowingly misgender with wrong pronouns"
Monica's issue seems largely to have been somewhat more estoeric, which related to something which she sought additional clarification on (and which I think would be difficult for moderators to administer). It led to a discussion about whether it was really a requirement in the policy to use preferred pronouns extended to situations in which you did not use pronouns.
Now there's definitely some scope for discussion/disagreement here in specific examples, and some mods have explained that they have a problem with a position she took (while not agreeing with what eventuated). This is something that we should expect to be discussed when a new policy is to be introduced -- particularly by the people being expected to police it. Not everyone will be on the same page and discussions are absolutely necessary for us to understand each other clearly. I am completely okay with Monica asking "It's okay if I do X, right?" and I am completely okay with Cyn and some of the other mods or members of the community more broadly saying to Monica "We really don't think that it's okay if you do that". This is not anybody trying to hurt anyone on either side of a conversation. (You might like to read Cyn's post on Writing's meta)
I think the policy definitely needs more discussion, some clarification and some polishing/refomulating. Not everyone will agree with everyone on all the details, or see them all as workable (in particular, for example, there can be religious restrictions on what some people are even permitted to do -- there should be some attempt to try to find some reasonable compromise in such cases).
I could have easily asked similar questions to what Monica seems to have asked. This is not incompatible with wishing to be inclusive and welcoming. I feel I could easily have been dismissed in her place, had I been part of the same discussion (I would have been if I was aware of it happening at the time). I see nothing in what has come since that would suggest I couldn't have very easily found myself in a similar position.
I think it's ludicrous to remove anyone over a Code of Conduct we don't even have yet which is what seems to have triggered the whole thing; as far as I can see she has not done anything that would consitute a violation of either the spirit or the wording of the current Code (on which, see).
I think it's bad faith to remove a community-elected volunteer without several other steps in between (indeed there was already a policy for removal but it doesn't actually seem to have been followed as far as I can tell) and some opportunity for further discussion. There was no review. No appeal. Just gone, without even being given the courtesy of being informed that it would happen. Monica still doesn't seem to know exactly what she's supposed to have done (which is weird -- what if it turns out someone hacked her email account, for example? How could she even know if what she did was not explicit?)
Some people have raised the possibility that it was perhaps to do with not using some people's preferred pronoun (singular they) in a chat room, but that would surely not be handled this way; any discussion and potential consequences for doing so in a site's chat room would surely be up to the moderators for that site, collectively; there's a formal procedure for dealing with site moderators who misbehave, clearly laid out.
It would take something really extreme for it to make sense to remove someone so quickly (or else it could wait a few days for more deliberate action); if there was some danger of acting improperly as a mod in the meantime (seriously?) then a temporary suspension from being a mod could be used. Something extreme enough that it couldn't sit for a weekend (that the mod had to be inactive for anyway) would likely require the involvement of police.
If anyone understands what it is to be part of a marginalized and abused minority, it's Monica (I'd provide links that might give you some sense of just how directly, but don't want to give away such specific details without her explicit okay, and she has better things to worry about). Worse, the sacking came just hours before the beginning of important religious holidays for her.
On top of everything else, the present situation has seemingly displayed incredible insensitivity and intolerance toward Monica. If Monica was not as gracious, it would very reasonably have been been called antisemitic.
Even if Monica had done what she's been accused of her removal in this fashion would be egregious, but it seems pretty clear that her actual position is not consistent with how it has been officially portrayed.
The present circumstances muddies the waters and seems to hand actual opponents of tolerance and acceptance of LGBTQI+ people ammunition with which to oppose the original aim. Indeed, I am convinced that as it stands it sounds far worse for LGBTQI+ people than anything Monica seems to have done and even worse than what she's been accused of doing.
You don't introduce a policy of tolerance with a purge.
Many moderators have resigned or stood aside. I pondered my response for while, then I stood aside from moderation while I considered further -- all the while hoping Stack Exchange would come clean, admit they made an error in handling it, apologize and reinstate Monica (or at least wind it back to a more proper handling, in a way that justice could be seen to be done).
Monica maintains that she doesn't know what it is that they think she has done wrong.
Instead they have doubled down. They have thrown shade in the media and they've acted to make it harder for people to find out it even happened. They've offered a weak apology which doesn't fix what happened and had done nothing to make me feel confident they understand what people think was wrong nor how wrong it was. The assurances that they'd do it better next time really concern me, since it needs to be better this time.
Monica has been one of the mods for whom I have the very greatest of respect - a moderator who I would aspire to be as good as. She appears to have been very shabbily treated. How does any of this improve Stack Exchange?
Every single employee of Stack Exchange, at every level, needs to think very carefully about one simple fact: the content that pays their salaries is generated for free by its users, and curated by the high reputation users and diamond moderators who donate huge amounts of time and expertise to make this a good place to find answers. Your income depends in very large part on the goodwill of the communities that generate content for you.
If mods can be terminated so casually, no matter the feelings of the communities who chose them, then they really should be paid for it.
I think this could have been solved a week ago, with a few emails and an actual apology or perhaps, two, if it were necessary to apologize both ways. Or failing that, with a simple, considered review of what went on, and then backing up before applying something nearer to proper procedure. How much has this policy of doubling down cost Stack Exchange already? For a company needing to make money they're acting like the sources of that money are both expendable and fungible.
Stack Exchange keeps saying they want to listen to moderators and to the community, but increasingly it seems like they do not (they actually did it pretty well, once). Stack Exchange talks of respect and tolerance but throughout this they don't seem to have shown a lot of either.
I continue to hope that SE will take real steps to undo the harm they've done to the goodwill of moderators and to Monica in particular (and indeed to any perception that they care about being welcoming and tolerant) but I see nothing to indicate that they will. At this stage an independent review of what happened and mediation would be a reasonable first step on that path, but given the response so far, I can wait no longer.
I can't give the implied support to Stack Exchange Inc that continuing as a moderator would suggest, and I can't be responsible for enforcing a future Code of Conduct that I (seemingly) can't completely understand (and apparently could risk removal for asking serious questions about), for all that I support its underlying aims.
I must, with the deepest of regret, step down.
I have to take care of some urgent work shortly after I post this, but I plan to notify Stack Exchange officially as soon as I get some time (assuming they don't see this and remove me before I get to it, which is fine, since my intent is 100% clear). [Edit this official notification has occurred; it might still take a while before I actually lose the diamond.]
As things stand at the moment I expect this will be my last post as a moderator, though I may add some details and will continue to edit as needed.
I'd like to thank my fellow CrossValidated mods for their kindness, professionalism, support and much else besides, throughout my term as a moderator and before. I have the deepest respect for each of them. I'd like to thank the wider moderation community on the SE network, who have helped me many times during my term as moderator. I'd also like to thank our many knowledgeable and giving users who make our site work so wonderfully. I think our community here in CrossValidated is amazing, and I hope to continue to be an active part of it in the future as an ordinary user, though for a time I will be stepping back somewhat from that as well, reducing my participation as an ordinary user for the present; I'll still be around hoping that Stack Exchange show a clearer recognition of their responsibilities in this relationship.
Just in case anyone is inclined to misunderstand the implications of any of the above, let me be clear:
I have no trouble whatever with singular they. In fact quite the opposite -- I have been arguing for it as a nongendered pronoun since approximately the mid 80s - useful, for example when you don't know a gender for whoever you're referring to - and have used it in my writing, sometimes in the face of quite a bit of opposition from editors. I didn't always win those arguments (in that my text got changed over my objections).
More generally I have no trouble with referring to people by a preferred pronoun. None of this is in any way a stance by me against calling people what they want, especially not people from marginalized and abused communities.
 (except for people who don't take it seriously and want to try to claim they should be referred to using "helicopter" as a pronoun or something; I think that ends up harming the very people it should be helping by making a mockery of it. That's not okay.)