Do you mean 2000-2002? 2002-2005? or after that? The internet evolved so rapidly during the early 2000s. We literally went from taking 30 minutes to download/load a 3 minute mp3 file, to being able to load large flash games (50mb+) in just 60 seconds. As others have said most of the games from the 2000-2002 era were very simple point and click games either undressing, dating sim, or quiz games because they mostly used static images layered on top of each other to save on bandwidth. EG: You click the girls dress and the static image of the dress slowly slides out of the frame or the transparency fades to 0. The Audio was often the same, a simple 5 second music loop compressed to all hell and back, with maybe 1-2 sound effects or voices that were barely half a second long. That was literally all you could fit into games of that era.
Compare that to 2005 onwards, people were managing to take live action porn videos and convert them to flash, albeit with horrible compression, abysmal frame rate and very short clips. Animators were able to include high enough framerates that porting old arcade games like Raiden was possible. This is probably the era you're thinking of when you talk about the rise of Newgrounds porn, it's when animators like Zone first started appearing with high quality work.
With regards to creative freedom:
It's also worth mentioning that "adult" content wasn't just limited to sexual content during that period. We had school shooting games, torture games, racist games etc. One of the biggest early flash websites besides newgrounds was stickdeath.com that was entirely just stickdudes killing each other. Absolutely tame by modern standards but back then they were considered extremely obscene and governments/lobbying groups did attempt to have things like this shut down. Fortunately technology was moving so fast that the people in positions to enact that kind of censorship didn't really understand how the internet worked and most sites would just change hosting and spring back up again. It definitely shaped the internet for years to come, though recently with the rise of social media and the deanonymising nature that brings with it, I'd argue we've definitely regressed backwards in that regard.
