How is censorship good or bad in the book?

The reasoning behind the censorship in Farenheit 451 is best captured in a conversation between Beatty and Montag at the end of Chapter 1. This narrative by Beatty explains why they have limited citizens' access to information:

If you don't want a house built, hide the nails and wood. If you don't want a man unhappy politically, don't give him two sides to a question to worry him; give him one. Better yet, give him none. Let him forget there is such a thing as war. Peace, Montag. Cram [people] full of non-combustible data . . . Then they'll feel they're thinking. And they'll be happy . . . Don't give them slippery stuff like philosophy or sociology to tie things up with. That way lies melancholy.

Beatty explains here that they keep their citizens "happy" by eliminating their access to anything painful, anything debatable, anything worth thinking about. Instead, they present history in a way that suits the government and that makes everyone feel comfortable with it and about themselves. Controversial ideas? Gone. Literature that some find offensive? Eliminated. History that was unflattering to the government? Changed.
Instead, the citizens are fed a steady stream of false reality and vapid programs to entertain them. There is no depth of thought, which Clarisse notices early in the book and before she disappears. (People who challenge the government's peaceful existence are simply eliminated, too.)
This shows how dangerous censorship can be. Who determines truth? Who writes history? Who decides which facts and books people have access to? Censorship takes away the ability of people to read, think, and change things for themselves by eventually masquerading lies and proclaiming those as the truth.