I’m looking into hosting one of these for the first time. From my limited research, XMPP seems to win in every way, which makes me think I must be missing something. Matrix is almost always mentioned as the de-facto standard, but I rarely saw arguments why it is better than XMPP?
Xmpp seems way easier to host, requiring less resources, has many more options for clients, and is simpler and thus easier to manage and reason about when something goes wrong.
So what’s the deal?
No, that is only an implementation detail, you can easily do a very similar thing with XMPP group-chats.
In fact the way Matrix does it is a major limitation and the source of an endless amount of issues with their IRC bridge.