Federation increases censorship resistance. I do not think it necessarily decreases privacy, although having metadata strewn across multiple servers may be a risk. Still, I think the comparison with email is a bit of a strawn man argument, since it is not only the federated nature of email which makes it easy to surveil but also the fact it is unencrypted by default.

Moreover, email these days is concentrating in the hands of a small number of providers (gmail, etc).

XMPP seems a lot more distributed at this point in time.