I was I heavy XMPP user back in the 00s. But on the whole it never really took off, and when Google killed XMPP support in their chat it was a severe blow. As for why it didn’t reach a larger userbase, I think the reasons that Moxie described in The ecosystem is moving[0] are spot on.
Last week I selfhosted Snikket: https://snikket.org, me and my partner use it to text. It has been smooth, everything works without issue: read receipts, audio/video calls, status.