by this you mean "mods" as in post-processing/layers/rendering (reshade,dxvk,vkbasalt,d912proxy,etc.)??? or graphics mods such as replacing assets/arts (making armour higher poly/higher res/texture packs/etc.)?? if it's the former, yes they are allowed afaik -- if it's the latter i think it crosses the line on Anet's terms of service about modifying the client and im not aware of any mods/modpacks that are in circulation (if they exist at all). There's some on youtube that directly influence assets on the client side like this:
But it's only on the client side so idk how Anet seees those. It looks pretty harmless (and creepy on the video lol). I just....what the actual fuu......omg. I may never sleep again....ever...