XMPP (née Jabber) isn't a broadcast messaging platform like Twitter or Mastodon, it's a one-on-one or small group instant messaging protocol. It absolutely failed to take off as a broadly decentralised instant messaging service, for a bunch of reasons, but it absolutely succeeded in becoming a widely used instant messaging protocol, at least for a while.
Jabber was born in 1998, in a world where there was a handful of centralised desktop instant messaging apps that didn't interoperate at all - ICQ and AIM dominated, but there were plenty of others around too. Most of us ran multiple apps at once, or tried to get clients that could connect to multiple services, but this was complicated by proprietary and frequently changing protocols.
A decentralised, federated, and open protocol that let users connect to all other users was a great idea… for users. But it didn't do anything for the behemoths rapidly gaining users in their proprietary centralised systems, and it didn't do anything for ISPs who'd just have to run, and support, another service. Early clients and servers weren't as straightforward as downloading a desktop program from Tucows and running it, and in the space of technically savvy people running a system built on open standards there was already a well established (and heavily fractured!) IRC.
XMPP's standardisation in the IETF didn't really help it. While the IETF isn't quite as slow as more traditional standards bodies it's definitely nowhere near as fast as centralised companies with only one client implementation to care about. As the war for eyeballs heated up, instant messaging apps rapidly added features like sharing images (crazy! over _dial-up_?) or emojis (before they were called emojis!) and XMPP simply did not keep up.
Nevertheless, XMPP was the basis of iChat (or at least, some versions of it) until iChat was killed in 2011, and the basis of Google Talk until that was killed in 2013. It wasn't too uncommon for corporate internal chat platforms to be using XMPP in one form or another - Cisco still have a product today called Cisco Jabber. But the main thing all of these systems had in common was they absolutely sucked at federating with each other. Theoretically Google Talk supported it, but your corporate system probably didn't. iChat notionally might've but as far as I recall it had so many proprietary extensions and missing standard features that it just wasn't feasible to federate. XMPP did pretty well for a stretch being the underlying protocol for a bunch of proprietary, centralised, and siloed chat systems.
In the end mobile phones killed instant messaging platforms. In the 90s most of us didn't have phones, but at the start of the century that rapidly changed and suddenly we all had the same instant messaging platform right in our hands: SMS. Sure, it was never built for heavy use, and mobile companies often charged per message (50c per text in Australia in the early 2000s), but it was _there_ and everyone was on it, and in just a few years desktop instant messaging died off. XMPP never had a chance.
Smartphones, of course, re-introduced the hot mess of a dozen competing instant messaging platforms with different parts of your social network on different ones, all centralised, all proprietary.