All the settings related to the activity comment moderation is accessible from Dashboard->Settings->Activity Comment panel.

General Settings:-

This section allows you to customize how the reporting behaves. You can enable hiding for the reporter. You can also set a threshold when the activity becomes hidden for all.

Auto Moderation:-

If you enable this option, all newly posted activity comments will need approval

Here is a screenshot showing the Auto Moderation panel 

Notification Settings:-

There are 5 types of notifications for activity moderation. You can enable/disable and customize them as you please.

• Admin notification on the new activity being reported
• Admin notification on the new activity being hidden
• User notification on their activity being hidden
• User notification on their activity being restored
• User notification on their activity being deleted

You can enable or disable any of these as you need.

Screenshots:-

Demo for Activity Comment Moderation for BuddyPress Moderation Tools