I think overall it's a niche feature, and I'm honestly not sure if XWayland allows X forwarding. I know it preserves pretty much all X behavior, including grabbing attention from other windows and such if you give it permission. I don't know how the implementation, specifically, works. Like if each application is under it's own X screen.
But, I think if you really rely on X forwarding you should keep using X. The last time I used X forwarding the performance was significantly worse than newer protocols like RDP. X is a very chatty protocol, which performs poorly on a lot of networks.
The performance is worse but the seamlessness of just using SSH to launch a remote app on the local display is incredibly useful when working on headless servers over LAN. Drastically more useful than having to start an entire windowed X11rdp session to run one app for five minutes
See my comments about Wayland team not listening to their users.
It is probably a niche feature FOR THEM.
Now, I most certainly agree that X over network is horribly inefficient.
However:
1. RDP is a freaking mess on Linux. It may be much better at the protocol level, but all the clients are horrible, and it misbehaves horribly across WANs and/or firewalls. And setting the whole fucking thing up is certainly *way* harder than typing the casual one-liner "export DISPLAY=<ip>:0; firefox&"
2. There is therefore no alternative to X11-over-the-net, and in this 21st century world of everything-in-the-browser enshitification, having to use X11 over the network is something I hit and absolutely rely on about once a week when configuring remote servers.
But, I think if you really rely on X forwarding you should keep using X. The last time I used X forwarding the performance was significantly worse than newer protocols like RDP. X is a very chatty protocol, which performs poorly on a lot of networks.