It’s expensive to self-host, and centralized if using Matrix.org. It has its uses, but XMPP MUCs have a lot of overlapping features & Prosody/ejabbard can run on a potato by comparison.

It might be expensive for an organization to host, but for individual / small groups it can be as low as $6/mo. I've been running a small Matrix server on a DigitalOcean droplet for years now, and the $6/mo plan has been working fine for 5 users, and three bridges running on that server.

I believe all messages/multimedia from all users & the history all the rooms & private messages need to be mirrored which can end up being a lot even with a few users depending on what they’ve joined. If my understand is wrong tho, I’d like to know so I’m not running around with this notion.

No, you're right...that can be an issue. I had to configure my server to disallow large rooms and enforce some file size limits.