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Xwayland is more of a hack if anything. Half of the programs don't work because the security model of Wayland is fundamentally different than that of X11. E.g. Xeyes won't follow the mouse cursor because Wayland developers decided it is a security risk to read out mouse coordinates when the mouse is not positioned above the window. More severe in the age of home office work is the lack of support for XGetImage() that makes using X11 videoconferencing software almost impossible to run on XWayland.

This has been working by default in all compositors for a while now, it is not a new feature or project.

Yes, Xwayland lets users run X11 applications inside Wayland compositors.