The rules specify a ban on NSFW content. For example, if the game is about Little Red Riding Hood, the scene of her death cannot be shown, it must happen off-camera?

Is Red Riding Hood dying naked? If no then it's fine

I mean, look at video game ratings.  Lots of games have player death in them.  It's in how you show it.

Question, in death, how much blood is too much blood?

nsfw refers specifically to nudity and gore. So as long as those two things don't appear in your game your good.

SFW Red Riding Hood Death:-

she lays there on the ground in a puddle of her own blood, her face is frozen in a pained expression, her body lifeless.

NSFW Red Riding Hood Death:-

a mess of guts and blood lays on the floor, severed pieces of legs and arms are scattered all around. And in the middle of it all is the severed head of the red riding hood.