For chat, it depends on what you mean by fail. What actually happened/is happening, is that XMPP the protocol works so well, that most chat apps start by just being another XMPP app, and if they ever get traction they make their servers incompatible with XMPP. That's what WhatsApp did for example.
For social networks, Mastodon is quite large especially in the tech space. It's just not facebook-size. But given that Facebook's success is driven by getting people addicted to their phones, I see this as a sign that Mastodon is doing better. Mastodon doesn't try and get you addicted. And the federation aspect works AMAZINGly. I don't know/even care whether a user I'm interacting with is in the same instance or not. And I can subscribe not just to publications of Mastodon users but also blogs, photo apps etc which implement the ActivityPub protocol.
So yeah, what you said is not nonsense, but I 100% disagree with "doesn't have 1bn users therefore federation failed".