Server-to-server means you set up your IM server, and I set up my IM server, and... drumroll please... they can actually talk to each other.

Remember when Prodigy users couldn't mail Compuserve users, or AOL users couldn't mail Usenet users? That's where IM is right now, held back by the fact that it consists of nothing but a series of closed gardens.

XMPP makes it work like email. Your JID looks like an email (and can also end up being an email identifier), and the servers know how to route amongst one another.

If you can't see how this might be a nice feature, it is only because you've become too used to the status quo to see.

Identity comes from the fact that your JID is now generally accessible from anywhere in the world, and thus your JID can be used as your identity, just as your email address can, and, like I said, they can even be exactly the same.

Further, since XMPP was designed to work this way from day one, it means that all other XMPP services work across servers this way. Presence subscriptions are correctly handled, one server can host conferences and people from other servers can participate, etc.

Integrating servers that are being used as message conduits between the front end and the back end of an application seems like a nightmare, security wise. I much prefer integration points to be limited rather than everything out in the open.

So you liked the prodigy solution better than email? Sure there was less spam.. but you couldn't talk to people

I'm not quite sure, but imagine something like webhooks but real-time. You could tell service A to ping service B over XMPP whenever something interesting happens; I think this would be harder with IRC.

Imagine a world where IM was more like Email... every company/org has their own server and everything else is just piping.

Think IPv6, or openID and you'll see what the feature is ;)