How can I change the brightness of the flashlight?
You can’t change the brightness of the flashlight.
But it was possible with my Samsung phone.
Is it a hardware limitation or just software?
Ok, I see now that Strobily also doesn’t work for more than 10 Hz. Because that could have been a hack (with pwm). 
It’s a software limitation. The torch is for sure a LED, which means it can be simply fed more or less power.
Unfortunately, Fairphone is years behind in terms of UX. I kinda wish I watched more videos about their phones before I dumped a bunch of cash on this mess. The worst part is that I recommend FP6 to my friend, because I saw some improvements in the last and only “big" update, and so I thought they would keep the momentum. Nope.
I’m seriously considering going back to my old phone since it’s still somewhat working (the battery is a safety hazard at this point tho lmao).