From what I recall, it was FB & Google federation of XMPP, and a huge number of various IM bridges that made XMPP usable at the time. I did have my own server, and all the nerd/geek friends I knew (so the vast majority of my friends) did the same. I even set up a servers at $job[-2] for intra-office communication, but still couldn't get decent buy-in.

These days, aside from a few die-hards, I don't personally know anyone using XMPP. I even ended up removing my server a while ago, because it had been years since I even launched a client to connect to it and not chat with anyone...