Immutable is new to me,

It's best to ignore the whole "immutable" thing as most of the discussion around that is conflating a bunch of other concepts and it just leads to confusion. When it comes to things like host daemons, these systems are designed to deploy daemons the same way as cloud servers, so for mpd it'd be running the service as a container. A quick search of /r/selfhosted shows some options, but I'm on the road so don't have time to recommend a specific image, but generally speaking anything server related is done via containers.

I use the 1password firefox plugin for my password management. There still isn't a flatpak portal that allows flatpaked password managers to talk to flatpaked browsers, that can be a pain point to some people depending on your use case.

As far as how you manage your distroboxes, that's up to you. We differ from fedora here where they default to "just use toolbox" for everything, whereas we default to "just use brew" for everything. I keep an ubuntu and fedora distrobox in case I need to check something from those distros, and arch is a popular choice. If you're happy with your existing distro but want the reliability of atomic updates then this is a good option. For most new users I recommend not caring about distrobox, most of that stuff is for developers or people that know how to linux already and know exactly what they want.

Also, are there any issues with upgrading a distrobox to a new major release over time?

Containers are designed to be ephemeral, so that you can recreate them on the spot when something goes bad. So I never upgrade boxes, I recreate on the spot using my custom configs. That way I have the same experience on all my machines and when something breaks I don't lose any time setting things up again. Distrobox assemble is awesome for this: https://github.com/89luca89/distrobox/blob/main/docs/usage/distrobox-assemble.md

So far my mindset has been make sure I don’t layer anything, but maybe some things like mpd do make sense to layer?

I don't really layer anything, I use everything via containers or brew. Generally speaking some people might have a few things they have no choice to layer - a good example is a VPN provider that doesn't provide a wireguard config for network manager and instead you have to layer some 3rd party app. But it's also not the end of the world, updates will take longer but 99% of the time I'm asleep when that happens or it happens in the background and is transparent to me. The more you layer the more maintenance you'll have to do when you do upgrades, so if you end up adding a bunch of 3rd party repos it'll behave the same way as a traditional distro and likely need to be babysat.

The system will update all your boxes and your brew packages as well, so whichever one you use you'll never be out of date. Hope this helps!