Could you explain the "by směl" as opposed to only "směl"? What would change if instead I said "Kdokoly směl odejít"? (It's the same thing according to google translate, but I don't trust that :) )
No, don't trust Google translate on these small nuances.
"Kdokoli směl odejít" is the past = "Everyone/(Anyone ?) was allowed to leave."
"Kdokoli by směl" is conditional.
směl = past tense (he did) vs směl by = hypothetical (he would do)
What's "anyone would have been allowed to leave" in czech?
Theoretically using the past conditional, but it is archaic or bookish in Czech. So in practice it is the same. If it is not accepted, I will add it.