In addition to the other replies, one of the main draws of Wayland is that it's much less succeptible to screen-tearing / jerky movements that you might sometimes experience on X11 - like when you're dragging around windows or doing something graphics/video heavy. Wayland just feels much smoother and responsive overall. Other draws include support for modern monitor/GPU features like variable refresh rates, HDR, mixed DPI scaling and so on. And there's plenty of stuff still in the works along those lines.

Security is another major draw. Under X11, any program can directly record what's on your screen, capture your clipboard contents, monitor and simulate keyboard input/output - without your permission or knowledge. That's considered a huge security risk in the modern climate. Wayland on the other hand employs something called "portals", that act as a middleman and allow the user to explicitly permit applications access to these things. Which has also been a sore point for many users and developers, because the old way of doing these things no longer works, and this broke a lot of apps and workflows. But many apps have since been updated, and many newer apps have been written to work in this new environment. So there's a bit of growing pains in this area.

In terms of major incompatibilities with Wayland - XFCE is still a work-in-progress but nearly there (should be ready maybe later this year), but some older DE/WMs may never get updated for Wayland (such as OpenBox and Fluxbox). Gnome and KDE work just fine though under Wayland. nVidia's proprietary drivers are still glitchy/incomplete under Wayland (but AMD and Intel work fine). Wine/Proton's Wayland support is a work-in-progress, but works fine under XWayland.

Speaking of which, "XWayland" is kinda like a compatibility layer which can run older applications written for X11. Basically it's an X11 server that runs inside Wayland, so you can still run your older apps. But there are still certain limitations, like if you've got a keyboard macro tool running under XWayland, it'll only work for other X11 apps and not the rest of your Wayland desktop. So ideally you'd want to use an app which has native Wayland support. And for some apps, you may need to pass on special flags to enable Wayland support (eg: Chrome/Chromium based browsers), otherwise it'll run under XWayland. So before you make the switch to Wayland, you'll need to be aware of these potential issues/limitations.