The module system is used extensively by the core java ecosystem (e.g. the jlink tool will create lean "JREs" based on which modules are actually used), and is getting more and more common in projects that are using a relatively modern Java version.
Besides, it makes sense to encapsulate at different scopes - a class, a package, a module, a library/application. These are "abstractions" on different levels, semantics, constraints.
That's why they introduced a module system for Java in Java 9. It sounded pretty cool to me when they announced it, but it was a bit too late to make much difference in the Java ecosystem (Java 9 came out 21 years after Java 1) and I haven't heard much about it since then.