I dunno. I think I may be on 7daysguy side on this one.
Basic game settings are offered in the vanilla game. As such, their a part of the vanilla experience. Developers put those settings in so players could change the default vanilla experience.
Mods, typically and traditionally, change game mechanics and/or content outside what you can do via game settings. Hence, truly modifying the game itself.
The server browser and start up categorization I think is something that TFP probably wants to enhance anyway. Ideally, a standard game tab with filters and showing the game setting tweaks a server did. With some search capability on game settings. Then a Modded tab that is for genuinely modded games. Custom blocks.xml, items.xml, etc. Custom DLL's.
But generally, in later game designs, whatever game loads customizations from a mods folder goes into a Mods tab would possibly be a common standard.
I'd like to see TFP, break out the blocks, items, and so on files so mods can host their own versions of these files that add to the content provided by the core game. With an option in a modders file set to denote a vanilla Item ID as removed from the game or extend an item or block of vanilla.
So no more modding vanilla xml files. You simply build your own with custom content with the same xml files or tweaks to vanilla IDs. Vanilla loads first, mods load last, first come first serve in load sequence. And wallah. Whatever is loading content from the this "Mods" folder becomes a modded game.
An ability to hook in custom DLL's would be awesome too as part of it.
Long story short... Mods as we know them today may be completely non functional compared to what and how things are modded in the future.
But game settings denoting mod status? Vanilla game settings? Meh.