Prosody is small and works for most people. Ejabberd is what powers production servers of bigger operators, it's also used in MMORPGs.

I can't say which is best, I can only say I use Prosody and am very happy with it.

Here's a howto on setting it up: https://homebrewserver.club/configuring-a-modern-xmpp-server...

I love Prosody. It took five minutes to set up and it's been flawlessly running ever since. We use it for internal company talk, pasting code, sending files. If you don't need 1M+ clients it's great.

I also set up an ejabberd instance for a client years ago when Prosody was not a thing but it's more complicated to set up. They changed the config file from Erlang to YAML a while ago but it's still complex. But it's nice it has a web interface to create users and easier to not get bothered about it once it's up and running. Ejabberd can handle a massive number of clients.

Here's an older discussion about XMPP self hosting:

https://news.ycombinator.com/item?id=8783794

Not sure if it's the best, but I tried openfire, worked great for my use case, it was easy to deploy on k8s.