There are a few companies that you might know of that use it, like https://block.xyz/ and https://abc.xyz/

Cool. Novelty domains for well established dot coms. Now go build a startup that you expect to build up and still own yourself 10 years from now using a .xyz domain.

Good luck.

It is why I don't use .xyz, but there are others that are cheap, e.g. .top. Moreover, one can always get additional domains later for the public image.

Check out this official site: https://abc.xyz/

Enterprises are increasingly blocking a lot of the random TLDs. So unless you want your service and site to be inaccessible for people with deep pockets, avoid most TLDs.

Bluesky's moderation team contact email is on .xyz

That's a baseless generalization. I love .top and I use it for regular services. Just because scammers use it doesn't mean that others don't.