Does "everything else" work with wayland? Like is the compositor the only thing I need to get most applications running without too much hassle?
Disclaimer: I haven't read up anything on wayland and don't know too much about how X or it's mechanics work
Yep, most applications should Just Werk.
sway comes with xwayland configured, which makes it zero-effort to run X-only software (eg software that doesn't use a wayland-enabled gui library like gtk3, qt5, sdl2...). The only pain will be if you have a hidpi screen, since xwayland will scale a non-hipdi rendered X window instead of passing down the scaling factor to X (which apparently is tricky). I'm in that case and what caused me the most hassle was firefox, but there is an experimental wayland branch (for which fedora provides prebuilt binaries) which i'm running smoothly.
Still don't see Sway 1.0 in Fedora repo though :(
Every app still needs to support X, because Wayland doesn't have remoting. I'd love to be wrong about this.
Do people experience noticeable lag on i3 on modern hardware?
It's more of a problem with Xorg, which does not do things atomically - leading to tearing and other problems which are absent on Sway. We also work at a level where we can orchestrate atomic updates of your entire layout as many windows are affected by a single update.