Bad is relative. But I have some problems with scaling on a HiDPI display with some Electron apps. I think that might be solved if they were Wayland native.

They are kinda choppy, when compared to native Wayland apps and screensharing from an app, running in xwayland doesn't really work...

If you need fractional scaling, they are unusable blurry. Some screens just need fractional scaling so for those setups it's almost essential to do this.

You need fractional scaling it your resolution is very high compared to the screen size. So something like a 15 inch 1440p screen would need 150% or 125% scaling because 100% is too small, 200% is too large but with anything in between, xwayland apps are blurry af.

Define bad.

If you can run native in wayland, run in native wayland. Your performance will be better, and if you need scaling, scaling is considerably better too

Like X11, xwayland is not as secure as a pure Wayland environment but I think it's important to note that hundreds of thousands of desktop Linux users are likely still running X11.

So, in my opinion, it is not ideal to run xwayland but still completely acceptable for most users who don't have special security requirements.