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?
You might want to try Snikket for XMPP then. Really streamlined hosting experience all out of the box. But Ejabberd also improved massively in that regard and their Docker images and deb/rpm repos pretty much work out of the box these days.
I host both Ejabberd and Synapse since some years and while I can see how self-hosting Synapse is a bit more approachable for first time self-hosters since it uses mostly web-technology under the hood, Ejabberd has been much less of an headache to maintain over the years. It pretty much just works and uses very little system resources (contrary to Synapse, even though it has improved a bit in that regard lately).
Edit: OpenPGP is supported by some XMPP clients for many years and OMEMO is significantly less problematic than Matrix e2ee in my experience. Matrix is a never ending stream of forced key resets and “message could not be decrypted” if you use it with the official web-client.