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Selfhosted
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Dino has an intentionally simplistic design, but it doesn't look "dated" at all. Gajim or Movim both look pretty modern and similar to Discord etc. these days.
And XMPP has bridges to pretty much all major commercial networks, it just doesn't have a major centralized provider of them that in exchange siphons up all your personal data like Element & Beeper does. But you can easily self-host the available bridges for XMPP.
That's highly subjective, but I've shown some Gtk3 apps to people at work and the most expressive first reaction I got was "ew". Dino and others getting that exact reaction wouldn't be surprising.
And this is another reason why it isn't prominent. "Grandma, all you need to do is host an XMPP server. It's incredibly easy".
Anti Commercial-AI license
You can easily do it for your Grandma. But your argument can be just as easily applied to Matrix vs. WhatsApp etc. If you use the centralized services of Matrix.org or Beeper then Matrix is just a very poor version of Discord.